TIME | Is The Housing Recovery Just an Illusion Created by the Federal Reserve?

Is The Housing Recovery Just an Illusion Created by the Federal Reserve?

It’s now conventional wisdom that the housing market — once the anchor that sank the American economy — is the ballast that’s keeping it afloat, however tenuously. The Case-Schiller index of home prices, released last week, showed a sixth straight month of year-over-year increases. Rising home prices buttress consumer demand as home prices are the single biggest source of the average consumer’s wealth. In addition, a recent report on housing starts showed that more new buildings are being constructed than at any point since July of 2008, and a revitalized construction industry could do much to bring down unemployment and spur economic activity.

Jed Kolko, the Chief Economist for the real estate website Trulia, compiles a “housing barometer” that measures how close the real estate market is back to normal based on housing starts, existing-home sales, and delinquency and foreclosure statistics. His most recent reading put the housing market at 47% back to normal. Writes Kolko:

“In the past three months, Trulia’s Housing Barometer has risen from 34 percent to 47 percent, which is the largest quarterly increase since we started tracking the recovery 18 months ago. Not only is the housing market closer to normal than at any other point since the crisis, the recovery is also accelerating.”

In other words, there’s plenty of data to choose from for a housing market bull to make his case. But even if these data clearly show an incipient recovery, what exactly is the reason for it? Tim Iacano of Iacano Research believes that most — if not all — of the recent rise in home prices is a direct result of efforts by the Federal Reserve to stimulate the economy.

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5 Responses to “TIME | Is The Housing Recovery Just an Illusion Created by the Federal Reserve?”
  1. stripes says:

    Yes…financial experts have stated this entire financial crisis was manufactured, including the fiscal cliff.. The FED & BANK INVESTORS, the hidden hand, are simply robbing us into oblivion. They are filling their foreign bank accounts with trillions in our wealth and stealing our property. The politicians are traitors & are in on all of it.

  2. It’s more than just an illusion it’s an outright lie.We need to get our country back and there’s only one way now to do it.

  3. Kathleen says:

    A tempr the 1% and the upper middle class. Wonder what the author would recommend to Boomers likely to be in the next wave of foreclosures? Reverse Mortgages? Where they’ll continue to pay escalating utility bills, property taxes, and HOA costs (passed on because of the number of foreclosures in the community,) hoping that in 10 years they’ll have more equity? Rents are so high in some areas that they have little choice but to pay all thise for the investors, who reap the benefits.

  4. Louise says:

    How can 8 million more foreclosures in the pipeline mean that the housing sector is improving?

  5. yvonne says:

    an illusion….

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