The Media Are Missing the Housing Bottom   

Media reports painted a pessimistic picture of today’s release on existing home sales, which fell 15 percent from a year ago and recorded higher inventories. But inside the report was an awful lot of very good new news, which appear to be pointing to a bottom in the housing problem; in fact, maybe the tiniest beginnings of a recovery.

For example, the median existing home price has increased four consecutive months and is up 10 percent since February. Yes, it’s down 6 percent over the past year. But the monthly numbers show a gradual rebound. Actually, this median home price is $215,000 in June, compared to $196,000 last winter.

And there’s more. One of the hardest hit regions is the West, including California, Arizona, and Nevada. The other two bad states are Florida and Michigan. However, existing home sales in the western region are up four straight months, and are 17 percent above the low in October. At the same time, prices in the West have increased three straight months.

Meanwhile, overall national existing home sales are basically stabilizing at just under five million. And in the first and second quarters of 2008, these sales dropped slightly by 3 percent in each case, which is a whole lot better than the roughly 30 percent sales drops of the prior three quarters.

It’s a pity the mainstream media keeps searching for more and more pessimism. The reality is a possible upturn in the housing trend, and at the very least we are getting a bottom. Stocks sold off 165 points largely on media reports of terrible home sales and prices. But I am hoping the market comes to its senses and realizes the data are a whole lot better.

And on top of all that, just as housing may be on the mend, Congress is about to ratify a huge FHA-based bailout that could total $42 billion. Congressional solons are putting up $300 billion to refinance and insure distressed loans through the Federal Housing Administration. But this dubious government agency, with a whole history of bad portfolio management, may wind up taking in the very worst loans on the books.

by Larry Kudlow at NRO

During periods of high inflation, investors inevitably look for safe, solid investments. Gold, collectibles, bonds and other instruments become more attractive. Real estate is ultimately the safest place one can put their money, because real estate has more inherent value than any of the other so called safe investments.

The intrinsic value of property is further strengthened by the fact that everyone needs a place to live, no matter how bad the economy is. What this means for the current market is that even as the economy slows and inflation creeps up, housing will regain strength as money moves back to historically safe havens.

This may fly in the face of the current media attention on the credit crisis and the subsequent effect on housing, but historical trends don’t die just because of modern fears and artificial bubbles. Already the housing market is bucking trends and picking up.