Housing: Don’t believe the hype

I’m sure many readers have seen the hype about the US housing market, with commentators and the mainstream media trying to persuade home-buyers and investors that everything’s coming up roses.  It’s been a steady drumbeat of optimism since last year.  A few examples:

I could cite many similar articles, but those will do to be going along with.  The trouble is, they’re false.  I can say that with confidence, based upon the numbers crunched by the US Federal Reserve – the ultimate financial authority in this country.  Consider these two graphs from the St. Louis Fed (click each graph to be taken to its home page for more information):

Home builders may be optimistic (see, for example, here and here), but the reality is that new housing construction is still in the doldrums compared to before the 2007-08 financial crisis.  Furthermore, jobs in the housing construction industry have still not recovered to the levels they last reached in January 2010 (on the way down), much less those of 2007.

Do those numbers suggest a ‘housing recovery’ to you?  Funny – they don’t to me either . . .

The reason I’ve put these figures and graphics up here is to illustrate that if you believe the mainstream media when it comes to economic reality, you’re riding for a fall.  The media are lying in their teeth, systematically, callously and deliberately.  They want to shield the Administration from the consequences of its economic policies, so they’ll try to continue the fiscal masquerade as long as they can.  Unfortunately, the underlying data don’t lie . . . so they’ll ignore them, and never publish them, and try to label those of us who pay attention to them as ‘prophets of doom’ or ‘ignorant’.

I’ll leave it to you.  Look at the cold, hard numbers, and make your own decision.  In that regard, I can only recommend and endorse the advice of Robert A. Heinlein:

What are the facts? Again and again and again – what are the facts? Shun wishful thinking, ignore divine revelation, forget what “the stars foretell”, avoid opinion, care not what the neighbors think, never mind the unguessable “verdict of history” – what are the facts, and to how many decimal places? You pilot always into an unknown future; facts are your single clue. Get the facts!




  1. There approach is that if you tell a lie enough from many sources, it will come true. This is because the people involved have never run a business and actually think that it is that simple. It works in politics and gets you elected, it must work in business.

  2. At this point, the more the media and government proclaim "all is well, brighter days are here," the closer I pull my raincoat and clutch my wallet.


  3. Well, the picture is complicated. Home Depot just announced earnings up over 10% and raised guidance for the year. There's something going on that wasn't.

  4. @Borepatch: Actually, if you think about it, that makes perfect sense. People can't move out (their mortgages are under water) or move up (they can't afford a more expensive home, or can't get a mortgage at all because of tighter credit): so they're having to fix up their present homes and 'make do and mend'. That, in turn, drives demand for tools, fixtures and fittings. I'd see that as fitting right in with a tight new-construction market.

  5. Peter, I work in the construction and maintenance and have for my entire career. That is exactly what is happening.

  6. And another fact for those who are wise: "Facts are stubborn things, and regardless of our inclinations, our desires,
    or the dictates of our passions, they cannot alter the state of facts and evidence."

    John Quincy Adams

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