The Housing Chronicles Blog: Is the nascent housing recovery a mirage?

Wednesday, September 2, 2009

Is the nascent housing recovery a mirage?

If you work in the building industry, after you've had plenty of time to take up new hobbies and interests in the face of the housing bust, it's easy to start hoping for the eventual recovery. But is it too soon to think that the current 'green shoots' we're seeing in the housing market will have legs? A story in Fortune asks the question:

Shares of Toll Brothers (TOL), Hovnanian (HOV) and KB Home (KBH) and other builders have surged. The exchange-traded fund that tracks the group has nearly doubled since March.

Home starts have risen for five straight months, while sales of new homes recently hit their highest level since last September. Prices are up as well: the Case-Shiller index of national house prices rose 2.9% in the second quarter, ending a three-year decline.

These signs -- as well as anecdotal reports about house shoppers growing more willing to write a deposit check -- have executives at homebuilding firms declaring the worst is over...

But housing boosters have forecast turnarounds repeatedly since the market peaked in 2006, only to be proved wrong by plunging prices. And skeptics say they're wrong again now.

They argue that a deeply indebted consumer, a weak job market, expiring incentives and rising foreclosures spell a quick end to any housing rebound...

Click here for full story.

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