Pumping Sunshine in the Housing Market

A video clip from a CNBC interview posted to youtube on August 12th, 2010 argues against a double dip recession in the housing market.  The arguments against a double dip, used in this video, seem like they are looking at the housing market through blinders.

Here are my problems with the arguments made.  In an earlier post today the U.S. showed an increase in the foreclosure rate over 2009 and accelerating from June to July of this year.  Short Sales continue to be a negative force.  We are lining up for another round of foreclosures over the coming year.  The rate of unemployment is still high, food stamps and bankruptcies continue to rise.  Housing market inventories rose in June.  Not too mention what the impact of new taxes in 2011 and the very real possibility of the rolling back of taxes will have on persons living month-to-month.  All of these events act as a negative force against the housing market.  I agree with Sherry Olefson that the government support has been giving a possible appearance of an increase in house prices.  Barry Ritholz says that the Case-Shiller Index shows house prices up (indeed in most areas they are slightly up), but prior to that stated that he said "Case-Shiller was the worst in showing the biggest decline in house prices".  So why would we take that data seriously now?  Another point that should be made is that S&P was so off on their credit ratings prior (refer to the big financial crisis we are trying to get through), to the point where the international communities do not want to rely on them (apparently neither does the US) so why would this data be validated.  Barry's point about apartment rentals going higher (yes, this is true, the rental market is going up and that market is getting tighter) is not an argument for higher house prices as renters are becoming renters due to losing their homes.

For a housing improvement to occur we need; natural demand for housing rising, jobs rising, housing inventories decreasing and less foreclosures/short sales.  These are signs of a healthy or recovering housing market.