Real Estate Recovery?

Over the past few years, there have been thousands of news stories covering the housing market.  Through all of the statistics and advice given out, the general public must be lost.  It seems as if the outlook for the housing market changes, depending on who's eyes you might be looking through.

Harry Truman once said "It's a recession when your neighbor loses his job, it's a depression when you lose yours."  After watching this roller-coaster of an economic adjustment, this phrase rings true more and more often.

S&P's Case-Schiller Home Price Indices based on peaks and troughs in the market trends.  The have labeled the spring of 2009 the bottom of the housing market, but many experts say that another nationwide bottom - a second dip - will be announced soon.

What is interesting, in my opinion, is that the National Bureau of Economic Research recently stated that the "recession" has been over for more than a year.  According to them, the "recession" was over when the economy stopped contracting and began to expand.

So why are people not dancing in the streets?  It's simple...

Perception.

The current housing crisis continues to be "real" to the general American public when things "hit home" - literally.  It wasn't until the general American lost their job and realized they couldn't sell the home for what they owed on it.  It wasn't until their mortgage payment began increasing and they realized they couldn't refinance the loan because of a low appraisal at their current balance.  It wasn't until a listing agent sat down with them and told them what the comparable sales looked like for their neighborhood.

The Case-Shiller sees recovery as a return of home values to their mid-decade peaks.  Alan Greenspan, on the other hand, thinks recovery won't be here until housing prices rise another 10% from the status quo.

Is it easy to see how important perception is?  Every analyst and expert will shout something different about the exact definition of "recovery," which means it will only get more confusing.


If you, as a consumer, are looking for the experts to give you a date signaling the end of this market adjustment, you're searching for the impossible.  The fact is, most homeowners in America won't think the market has "recovered" until their mental target value for their home is reached.  Most buyers, alternately, won't think recovery will be here until they've been priced out at the value they recently purchased.

In every household, there is only one person who can dictate where the recovery is at to-date - you.