Good News For Sellers: Home Prices To Rise 7%

Ugh. How many times do we have to go through this? After numerous times calling the housing bottom since 2008, Barron's is once again back and providing the good news that anyone who is brave enough to purchase a home today will make at least a 7% return on their money. The only decision is how much money do they want to make? A larger purchase price only means greater returns.

What readers here know is that most foreclosures continue to be held off the market today artificially reducing the available supply.

We also know that a zero interest rate policy with all loans guaranteed or purchased by the government has created an artificial lending environment. The following chart shows the difference in government mortgage origination in 2005 (50%) vs. government mortgage origination last year (95%). Remember that in 2005 it was already was too high at 50%, which fueled a large portion of the housing bubble. At 95%? God bless the American tax payer. Click for larger image:

The next great chart shows the upticks every step along the way during Japan's twenty plus year housing decline (homes are still declining today).

Why is real estate still declining in Japan 22 years after it peaked? The has government stepped in at every possible point to "stimulate," and they never allowed the inventory to clear the market. Sound familiar?

16 more years to go

h/t Zero Hedge, Dr. Housing Bubble