Here's a picture of peak to trough in U.S. residential real estate, from 2005 to the present in the 20 cities S&P/Case-Shiller tracks home prices. The latest figures for October 2010 reflect a 0.8% decline year on year, which exceeded the drop most economists forecast. Parsing the mix of real estate transactions, the impact of distressed sales after the last of artificially-supported pricing from home buyer tax credits, and the concentration of sales in Case-Shiller cities vs. the broader high-volume market will go on from here. The important question is, will demand re-surface to counter distressed sales' influence on C-S indices or no? This is an "Animal Spirits" question, and it will only have an answer when jobs data show a sustainable pattern. Prices haven't bottomed, but have they stabilized? We're back to looking at second derivatives.

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