Breaking the surface?

The housing market could be picking up

By Jared Bernstein

Published July 13, 2012 1:38PM (EDT)

This originally appeared on Jared Bernstein's blog, On the Economy.

Those who hang around these here parts know that I maintain a solidly realistic view of the current economy, both here and abroad.  So if I post something upbeat, let’s be clear: I don’t think we’re out of the woods, I’m not anywhere near satisfied with the pace of job growth, GDP growth, wage and income growth, etc.

But I have noted some signs that the housing market just might be carving out a bottom.  And that said, I’ve also noted that any improvement in prices will help ameliorate one of our serious outstanding problems: negative equity in your home.  So, it was with great interest that I read this today, from CoreLogic:

Together, negative equity and near-negative equity mortgages accounted for 28.5 percent of all residential properties with a mortgage nationwide in the first quarter, down from 30.1 percent in Q4 2011. More than 700,000 households regained a positive equity position in the Q1 2012. Nationally, negative equity decreased from $742 billion in Q4 2011 to $691 billion in the first quarter, a fall of $51 billion in large part due to an improvement in house price levels. [my bold]

If you mine these data, you know that it takes more than a quarter to establish a positive trend–in fact, the first three quarters of 2010 saw a declining trend in the share of underwater mortgages, before it spiked up again in early 2011.  But FWIW, and I’ll forgive you if your response to that is “not much,” most analysts agree with me that there may be something a bit more lasting to this.  Keep watching the data, but keep your powder dry too.

Jared Bernstein

Jared Bernstein joined the Center on Budget and Policy Priorities in May 2011 as a Senior Fellow. From 2009 to 2011, Bernstein was the Chief Economist and Economic Adviser to Vice President Joe Biden. Follow his work via Twitter at @econjared and @centeronbudget.

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