Are We Sure These Are Good Signs?
It is being reported that existing home sales are starting to rebound. Well, duh! After the market price of a home drops 18+% in a single year and the government is paying first time buyers $8,000 to buy a house what would you expect? A $150,000 house is now worth $123,000 minus a $8,000 coupon (on the taxpayer’s dime) = $115,000. Is it a good sign though? The Realtors' association says that based on historical data, the pending sales numbers do closely track future sales. But the correlation is much stronger in the year-over-year data than it is in the month-over-month numbers. The increase over March 2008 was much more modest, just 1.1%. Historical context may mean nothing in this downturn. Despite what big banks are telling Congress, it's very difficult to get a loan these days. Buyers who have been pre-qualified by lenders often find it's a different story when they actually request the money. The down payment or interest rate required could be larger—or the money might...