Are mortgage rates still too high for a rebound when looking at real mortgage rates?
Housing stocks, and the enablers that helped create the bubble (Financials), are following the usual pattern of busted bubbles. After the bust, these past bubbles typically see a beta bounce establishing post crash highs. After that, it can take many years before these highs are again broken.
We consider it incredible that most of the leading economic indicators have staged such traditional V-shaped rebounds with virtually no boost from the housing sector.
A historic look at farmland prices and home prices helps put today in proper perspective. Farmland price levels look especially vulnerable. Considering the high level of leverage now employed by some land owners, the high interest rates and the low cash flow, auction hammers may soon echo through rural America. Home prices are not as vulnerable but declines of 20% in nominal and real dollar values would not be surprising.