OK, it's official now: The housing market is recovering. Three out of the four biggest U.S. banks agree, so it must be true, right?
The latest ginormous U.S. bank to declare housing on the mend was Bank of America, personified by its CEO Brian Moynihan, who on Monday told Bloomberg TV, "The worst is over."
"You’re starting to see the home market heal around the country," he added.
Moynihan's pronouncement follows similar songs of praise from JPMorgan Chase and Wells Fargo on Friday. "We believe the housing market has turned the corner," JPMorgan CEO Jamie Dimon said. Both banks reported huge gains in mortgage lending in the third quarter, which helped pad their profits. "YOU'RE WELCOME," said Ben Bernanke, who has helped keep mortgage rates at record lows. Bank of America doesn't report its quarterly results until Wednesday morning, but Moynihan's comments seemed to be raising expectations for some good news.
This business of three things happening in a row, they teach you in journalism "school," constitutes a "trend." So we can now safely declare, as journalists, that housing is trending upward.
But hang on, there's always one turd at the trend party, and far too often that turd is Citigroup. What did that spoil-sport bank have to say about the housing market on Monday? It reported better-than-expected quarterly earnings, but in a conference call with analysts, Citi's chief financial officer John Gerspach got all Winston Wolfe on us and suggested we should not to start slapping each other's backs just yet.
The Associated Press writes:
"I don't use phrases like 'turn the corner,'" Gerspach said, referring to statements Friday from JPMorgan CEO Jamie Dimon and Wells Fargo finance chief Tim Sloan. "I have difficulty seeing corners sometimes, so I'm not sure what corner we may have turned."
"There's still a question in my mind about whether we've got a strong enough economy to continue sustaining the housing market," he added.
First, somebody get this man some glasses so he can see corners, for God's sake. Let's hope he's not driving on our roads.
Secondly, good for him, for not just jumping on the housing-recovery bandwagon. But how seriously should we take his caution? There are two ways to look at it:
The first, non-cynical way to look at it is to say that Wells Fargo, JPMorgan and Bank of America are the three biggest mortgage lenders in the country. If anybody knows what's happening to housing, it's these guys.
The second, more-cynical way to look at it is to say that Wells Fargo, JPMorgan and Bank of America are the three biggest mortgage lenders in the country. If anybody stands to gain from pretending that housing is on the rebound, it's these guys.
For now, the actual data back side with the banks. Home re-sales are at two-year highs. Home builders are at their most confident in more than six years. The Federal Reserve's latest "beige book" report cited real estate as a strength in the broader economy.