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The Housing “Recovery”

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Along with “happy happy joy joy” employment reports, the mainstream media has been vigorously applauding the “recovery” of America’s housing market. Home prices rose 8.1 percent in January, after a 7.3 annualized increase in the fourth quarter of 2012 – the third straight quarter of growth.

Awesome, right?

Wrong. Poking a hole in all of this hot air is Tyler Durden over at Zero Hedge – who reveals some discomforting data which shows the current recovery as a likely “self-destroying bubble” without any real “organic growth.”

“If you dig down just an inch or two into the real data, the housing ‘recovery’ is the little train that isn’t,” Durden notes.

The most troubling stat? The rate of mortgage applications – which remains depressingly stagnant.

Take a look …

stagnant

Chart: Bloomberg

Meanwhile, as for those rising prices we’re neglecting to consider the impact of inflation.

“When we look at housing prices in real terms, the adjustment will take much longer,” an industry expert told Fox Business recently. “We will see, in many markets, double-digit nominal price increases. This is not necessarily a sign of a boom, but a reversion to normal pricing. We should not forget that if a price declines by 50 (percent), it will then need to increase by 100 (percent) to return to the same price. If we go back to the real or inflation-adjusted price, we can note that 3 (percent) appreciation is required when we have inflation on 3 (percent) to just stay even in real terms.”

Wait … none of you fools took fractions?

Sheesh …

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