Superrich, cash-rich buyers bought "shovel-ready" distressed land for a few dimes on the dollar. They are now beginning to cash in. However, there is this:
Investors and real estate analysts do caution that a full-blown housing recovery is still some time off.
"The housing market is getting better but we're not quite there yet," said Stephen Malpezzi, an economist at housing data company Zillow and a professor at the University of Wisconsin's Department of Real Estate and Urban Land Economics. "We all get excited when we see a few months of positive numbers, but we are still in the middle" of a fragile period for the housing sector, he said.
This post is a little heavier on the editorial side than usual:
Note the term "fragile" in the block quote above. If, for instance, all of the Shadow Inventory (real estate where owners have lost it to the banks, etc., or are losing it or likely to) comes on the market too quickly, steady price/value increases will be destabilized and tumble. Even with lower prices, many people of fairly average incomes and net worths would still not necessarily be able to come up with adequate down payments to absorb the new, real inventory any time soon (perhaps 4 to 6 years or even longer).
The Fed's mandate is not to protect the average person but the commercial-banking system. However, the Fed's mandate is also to create jobs without stimulating unmanageable inflation. Americans need good jobs to be able to afford to absorb the housing inventory that is already on the market and that will come to the market from the Shadow Inventory and new construction. Multi-family construction adds to the pressure on the existing and shadow inventories. The trend of the young to prefer renting is another factor.
As a nation, we either wait many, many years for the recovery to trickle in or we figure out how to write it off equitably. The problem with the latter is that stockholders of the various mega-banks would have to take the hit that everyone else has already taken. Those investors have a great deal of clout in Congress and the White House, etc. In addition, not all of those investors were aware of exactly what various Wall Street investment banks were up to funding every no-doc loan in Orange County and then the whole US. That's why we said "equitably" above. Even those investors who would have done the maximum due-diligence would not have understood what the Quants on Wall Street were masking. Nevertheless, the idea that all Americans should shared the pain was ethically correct in our view and it's still not too late to turn in that direction.