Housing recovery - or More Smoke and Mirrors

What a week. Monday the recession was over, Tuesday it was back on, and now Friday the housing market has bottomed out, again, for the forth month.

Today, after tinkering with their figures some more, they announced that existing home sales went up 7% in July. WHOO HOO, everything is looking up again!

But what is hidden in those new numbers?

First off, they didn't mention the 90,000 homes that were foreclosed on in July. That might offset that number a bit.

Next:

Sales in July rose for the fourth straight month to hit an annual rate of 5.24 million units, the highest since August 2007, the National Association of Realtors said. The total beat market expectations of a 5 million unit pace and June's 4.89 million pace.

In regular language, they hoped for 5 Million home sales by the end of July, and actually tallied 5,24 Million. Annual rate, simply means how many that have been sold up to that point in time. But calling in the annual rate makes it sound a lot more impressive.

Here is the real goody:

With distressed sales accounting for 31 percent of the transactions in July, inventories rising and home prices remaining depressed

Foreclosed homes made up 31% of the 7% gain. Depressed prices made up the rest, and these prices were already depressed this time last year..

The national median home price was $178,400 in July, down 15.1 percent from the same period last year, weighed down by distressed sales -- sales in foreclosure or close to it -- as such homes typically sell for 15 to 20 percent less than traditional homes.

So the houses that were not foreclosures that were sold, were marked down between 15 to 20%. This time last year, my former house had a depressed value of 18%, so I would think that this would mean in reality, the prices are down from 30 to 40%.

Then factor this in:

The inventory of existing homes for sale in July rose 7.3 percent to 4.09 million units from the previous month, NAR said. At July's sales pace, that represented a 9.4 months' supply, the same as in June.

So while sales went up 7.2%, there were 7.3% more houses put on the market due to foreclosed properties. To me, that looks like the market isn't breaking even.

Next, we have the shadow market. Somewhere around 1 Million homes the banks refuse to list or put on the market. It makes the books look better, and these bogus figures they put out look better.

In fact, our old friend Barny Frank now wants to take those houses, and rent them back to the former owners.

Add to that, the government put on a foreclosure moratorium, so they in effect stopped taking houses until the end of September, All in an effort to artificially hold prices higher than they should be, and keep the banks books looking profitable.

What they are passing off as a rebound in the housing market, is really nothing more then accounting tricks, and fanciful numbers created from the accounting tricks.

If you tried this with your tax return, they would arrest you.

But, this is they same way they come up with unemployment numbers. Just tinker with them enough and come up with something that doesn't sound too bad.

Add into all this the news that the deficit is now being projected at 9 Trillion over the next decade.

To put that into perspective, when Team O took office and passed the Stimulus bill, the combined national deficit since the founding of the country was 11 Trillion Dollars.

I think we are heading over a cliff. You can only fiddle with the books for so long before it all comes crashing down. The question is, how long can they keep the fraud going before it crashes.