We wrote here over the past several months that the air would soon start coming out of the housing bubblet. We noted that the temporary inventory supply/demand imbalance would soon reverse. We noted high levels of student loan debt and a poor jobs market producing mostly part time jobs would hamper any further housing sales and price appreciation.
We noted interest rates would rise because of the Fed’s taper talk (not because the economy was improving) and put further pressure on the real estate market. We noted Bernanke’s admission that the economy was weak and would tank without low interest rates.
We also noted that the supposed strength in the stock and real estate markets were not what they appeared and the employment situation was worse than it appeared. Stock and home prices were soaring but despite all the recovery talk, the economy was not recovering.
We were assured through endless Keynesian self congratulating that quantitative easing (QE) spawned a recovery that was underway and the worst was over. We thought it premature. We were told interest rate increases didn’t matter;the housing recovery would continue apace. We disagreed.
Finally we asked -can the housing recovery continue?
Last week we learned what we suspected all along....