Hyde Park Blvd

Despite the recent headlines about housing’s uptick, the backstory is a bit more complicated (compliments of Bianco Research):

While the media was speculating that housing finally hit its bottom and the great decline of 2006 to 2009 was over, S&P then posted the SA data.  This data showed a slight decline between April and May.  It also showed that 12 of the 20 cities surveyed had price declines in May.

The Blog Calculated Risk has done an excellent job of analyzing the housing data.  They note that housing really has two bottoms.  First sales (volume) bottom and then prices bottom.  While possible, history shows that sales and prices do not bottom at the same time.  Additionally, home prices often do not bounce back as quickly as other assets after a prolonged downturn.

Via reader RS

Writing in the July 25 Economist, Guioso, Sapienza, and Zingales explore the likelihood that I’ll default on my mortgage.  The implication:  Gov. Sanford makes it more likely that I’d learn to tango.

Anger about bail-outs of banks or carmakers does not weaken the moral barrier to default. But people who live in neighbourhoods where home repossessions are frequent are more likely to welsh on loans. Homeowners who know someone who has defaulted strategically are 82% more likely to say they would do so, too. The likelihood of strategic default rises more quickly once the rate of local home foreclosures reaches a critical level. That hints at a vicious cycle of foreclosures that both depress home prices and weaken the social and economic barriers to further defaults. To break the cycle, policymakers need to address the problem of negative equity, not just unaffordable interest payments.

One wonders:  does negative equity play in sexual behavior as well?

Low-income housing project in Ixtapaluca, Mexico. Not the scale of Chinese projects, but amazing nevertheless.

Via Mirage.Studio.7