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Housing Remains Lone Asset Class Immune to QE

by Brett on February 23, 2011

Since March 2009, it’s been a bull market in just about everything!

gold commodities stocks price chart 2011

Source: Google Finance

Well, except for housing that is…

Source: www.csmonitor.com

Housing remains the lone asset class that appears completely immune to QE.  Which is ironic, and perhaps appropriate, because smart people such as Andy Kessler have hypothesized that boosting real estate was the real motivation of the QE programs.

Despite “The Bernanke’s” best efforts, housing prices continue to slide:

Residential real-estate prices dropped in the 12 months to December by the most in a year, a sign the U.S. housing market is struggling even as the rest of the economy recovers.

The S&P/Case-Shiller index of home values in 20 cities fell 2.4 percent, the biggest year-over-year decrease since December 2009, the group said today in New York. The median forecast of economists surveyed by Bloomberg News projected a 2.3 percent decrease.

A predicted increase in foreclosures this year as banks resume seizures may depress home values further, prompting would-be buyers to hold off on purchases. Unemployment at 9 percent and declines in housing are among reasons the Federal Reserve has signaled it will proceed with its unconventional monetary stimulus.

(Source: Bloomberg)

Friends and family who live the American life by “the playbook” often ask me when we’re going to buy a house.

But why try to catch a huge falling knife?

Besides the continuing bearish price action, I also think home buying is extremely  overrated – read why here.


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