Housing Market's Lame Comeback: Seven And A Half Things To Know

Because your cards and letters demanded it, there's finally a video game that teaches you everything you need to know about Jay-Z's life. For the time being, here are seven and half other things you need to know, though perhaps slightly less:

Thing One: Housing's Sort-Of Comeback: As you may have heard, the U.S. housing market has been a Boschian hellscape for more than six years now, the payback for those crazy years of a housing bubble that featured bidding wars and silly prices. Well, good news, America, the crazy is back!

At least half of it, anyway: The Wall Street Journal reports that there are bidding wars again on houses, at least some houses, all over the country, or at least some parts of the country. And these bidding wars do not result in silly prices so much as they leave homeowners in slightly less deep holes: "Even though bidding wars are pushing prices higher, many homes are still selling for prices far lower than a few years ago."

But wait, there's more cold water: Bidding wars are starting because of tight housing inventories, but those inventories are artificially tight because banks and Fannie Mae and Freddie Mac are keeping more than 2 million foreclosed homes off the market. Meanwhile, some 11 million homeowners still owe more on their houses than their homes are worth, including more than a million people who have just bought in the past two years, Reuters reports: "Many borrowers, particularly since late 2010, thought they were buying at the bottom of a housing market that had already suffered steep declines, but have been caught out by a continued fall in prices in wide swaths of America." And why have these buyers been taken by surprise by falling home prices? Partly because of the constant cheerleading of the real-estate brokers and housing "analysts," who keep saying a bottom is in. They'll cite stuff like yesterday's report that pending home sales jumped a bunch last month. But they'll be less enthusiastic to let you know that home-purchase contracts keep failing because appraisal values keep falling below agreed-upon sale prices.

Thing Two: Pain In Spain: In news that will shock only people who have never heard of "Spain" or "credit" or "rating agencies," the credit-rating agency Standard & Poor's downgraded Spain's credit rating yesterday by two notches, to BBB+ from A. The credit market, which already has determined that Spain has a lower credit rating than that, yawned, as did the rest of Europe. Bigger fish to fry, like whether to finally give up on the fairy tale of austerity, as Paul Krugman puts it, the kind of fairy tale that leads to the mass suicide of an entire continent, as Columbia economist Joseph Stiglitz puts it. Spain, meanwhile, remains in a "huge crisis," as its foreign minister put it.

Thing Three: Inside Addition: Goldman Sachs names just keep bubbling up in the Galleon Group insider-trading investigation. Yesterday The New York Times and the Wall Street Journal reported that a fourth Goldmanite is under investigation on claims of feeding tips to Raj Rajaratnam, the convicted manager of the defunct Galleon hedge fund. Neither Goldman nor the Goldmanites under investigation have been charged with any wrongdoing, and the lawyer for Goldmanite Numero Quattro denies his client fed inside information to anybody.

Thing Four: Google Ga-Ga: If you're like me you've never heard of Beth Wilkinson until this morning, but the words "Beth Wilkinson" apparently strike terror in the halls of justice: The New York Times writes that the Federal Trade Commission's hiring of Wilkinson means it is so going to take Google to court in an antitrust case. Oh, it is on, Google, Beth Wilkinson style. "[T]he core question is whether power was abused. The agency’s inquiry has focused on whether Google has manipulated its search results, making it less likely that competing companies or products appear at the top of a results page."

Thing Five: Run For Your Money Fund: Money-market funds, which you probably own in your 401(k), played a role in the financial crisis, taking on a bunch of short-term credit risk that nearly set our retirement money on fire when everything went horribly wrong. These funds, which are supposedly among the safest assets you can own, are still too risky, Boston Fed President Eric Rosengren writes in a Wall Street Journal op-ed. And yet! The funds, shockingly, are lobbying as hard as their little legs can carry them to oppose new SEC regulation that would make them safer, the WSJ reports. And of course Congress is listening to the funds, not the regulators.

Thing Six: For Your Health Care: President Obama's health-care reform law is not exactly the most popular piece of legislation ever enacted, but it might get a little more popular in the coming months as insurance companies, due to a little-known feature of the reform law, send out rebate checks worth more than one billion dollars to individuals and employers, writes Jeffrey Young of the Huffington Post. The rebates are "expected to go out around August," the Wall Street Journal reports -- not long before the election.

Thing Seven: Amazon En Fuego: Amazon.com reported its best quarterly results in like forever last night, thanks in large part to hot sales of its Kindle Fire, Reuters writes: "During the first quarter, nine out of 10 of the top selling products on Amazon.com were digital products, including Kindle e-books, movies, music and apps, the company noted."

Thing Seven And One Half: Any Day Now: On this day six years ago construction first began on the 1,776-foot-tall "Knee-Jerk Reaction Tower," er, "Freedom Tower" at One World Trade Center. It still continues.

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Calendar Du Jour:

Economic Data:

8:30 a.m. ET: GDP for the first quarter 2012

9:55 a.m.: University of Michigan Consumer Sentiment Index - final reading for April

Corporate Earnings:

Before Market Open:
KKR
Chevron
Newmont Mining

Morning:
Ford
Merck
Procter & Gamble

Heard On The Tweets:

@moorehn: Meredith Whitney and Citigroup hate each other SO MUCH that it might actually be frustrated love. http://t.co/EfJnLqW6

@conorsen: If 2011 was about riots due to austerity, 2012 is about failures of austerity leading to new approaches. Very encouraging.

@ReformedBroker: Really, people - "Pending Home Sales"? How many times do you need to be fooled?

@NeilShahWSJ: Who is America's top young economist? Here's a run-down of contenders http://t.co/UXSHnUVG

@jfahmy: 30% of the female traders on Twitter are named Mike $STUDY

@wiserguy1971: @jfahmy btw, how do you know? did you hit on some of em? lol

-- Calendar and tweets rounded up by Khadeeja Safdar.

And you can follow us on Twitter, too: @markgongloff and @byKhadeeja

Comments

[jaxsons nana]

12:29 AM on 04/30/2012

The difference this time around IS in the misleading/ unethical/ and sometimes illegal way the banks handled things. BUT very hard to prove. I won't go into the dirty documented details, but it is happening to me right now.

I will NOT damage my home. I respect my neighbors and will leave it close to as I bought it, along with minor updates over the years.

Wells Fargo.......

[Realist2011]

02:18 PM on 04/29/2012

There is no housing recovery. Just another housing scam being perpetrated by the very same criminal banksters that caused this whole mess, along with a complicit group of politicians in Washington.

If you buy a house in the next ten years, you're a fool. When, not if, when Fannie and Freddie and the banks actually start putting those millions of foreclosed homes on the market, the prices are going right through the floor (again). This time, as the article indicates, it will be taking those morons who bought into the "hype" of the RE agents, Washington and all the other "cheerleaders" into the "new" foreclosure mess.

[MayorsRevenge]

09:29 AM on 04/28/2012

Bidding wars are not back. Taxes and cap gains tax are going to rise into hyperinflationary tuition costs and other costs of living on top of at least 3.5 million shadow inventory.

Don't fall for the cons. Housing is not a good buy here and is still waaaay overvalued.

Low interest rates are a bad thing for buyers becuase they artificially support higher prices but when rates rise those prices will even further. Low interest rates always = higher prices for anything temporarily.

[John Woelflein]

04:03 PM on 04/27/2012

It's One World Trade Center, not the "Freedom Tower."

[Kenz300]

12:45 PM on 04/27/2012

Banks need to do more.

They went crazy in 2005 and gave money to anyone. Now they have tightened standards so much that even with a good credit score and a down payment you can not get a loan.

Housing will not improve until banks start working with home owners.

[Wow Unbelievable]

02:57 PM on 04/27/2012

Yes you can.

I had no problem... in fact I bought a home and then less then a year later interest rates went down and I refinanced. No if's and's or but's about it. Filled out the paperwork, supplied my financial records and signed on the dotted line. Everyone I know who has either bought or refinanced has had no trouble.

Banks are loaning.

[econ1]

12:33 PM on 04/27/2012

The administrations effort to increase the cost of housing are beginning to take effect. At the same time holding interest rates near zero while inflation is somewhere between 2 and 5% depending on what you include is savaging savers and the elderly. Good for banks, real estate developers, real estate agents, local governments...not necessarily good for people looking for housing.

[ALL OK HERE ON PLANET X]

02:42 PM on 04/27/2012

With all due respect, I don't think you know what you are talking about (or your comment makes on sense). If it is the administration's goal to improve the housing sector through whatever mechanism is effective, then, it is a real stretch to proclaim the effort is to increase the cost. Local market forces of supply, demand, competition, quality, and location, and a myriad other factors effect prices; the President can't wave a magic wand and proclaim housing prices up or down all across the country, equally for everyone; can't and won't happen. Sorry.

[econ1]

03:49 PM on 04/27/2012

Of course the President can't waive a magic wand...on house prices or gasoline prices. And I don't mean to single out just the current administration. Our government has promoted home ownership for a long time. The benefits of tax deductible mortgages, capital gain roll over, capital gain exclusion etc.. These indirectly benefit real estate brokers, banks, developers and local governments by supporting higher valuations than would otherwise be the case. Few other countries offer this type of subsidy. In an effort to spread the "home" and continue support for real estate interests we essentially gave people housing with nothing down.

[nixthetrix]

10:02 AM on 04/27/2012

"Home prices are surging in metro Phoenix, climbing 8 percent in March alone and 20 percent in the past 12 months."
The downside is that this causes property taxes to go up . If only my salary would as well .

Read more: http://www.azcentral.com/news/articles/2012/04/26/20120426phoenix-area-homes-prices-up-20-percent.html#ixzz1tFVBJ1p6

[mfitz11]

12:51 PM on 04/27/2012

And therein lies the issue.
The is no healthy way that house prices should increase while median income in America is decreasing or remaining the same.
When I see home prices increase when the median income is still low, it simply means that another false bubble is being created which is bound to burst again in the near future.
Home prices simply cannot rise in a healthy manner until income rises in America, that is a lesson learned in Econ 101.

[yakmeat]

02:11 AM on 04/29/2012

Bingo. A $250,000 house on $26,000 per year (the median income) does not work.

[Norma Ward]

08:21 AM on 04/27/2012

Here's a look at the number of new single family housing permits in the United States compared to historical levels:

http://viableopposition.blogspot.ca/2012/04/us-housing-permits-historical-viewpoint.html

Perhaps it is just a shortage of new homes being built in certain markets that are causing bidding wars to erupt.