The residential housing market drumbeat has begun again. Rising housing prices are depicted as "proof" that residential real estate market, with its odious bidding wars, has recovered its animal spirits. Foreclosures, still very much a fact of life in many parts of the United States, are conveniently ignored. Instead, the focus is on rising prices, as if this event were in and of itself the greatest possible good our Federal Reserve-subsidized economy can generate.
A look behind the "good news" curtain offers a different perspective.
Late last week, Wells Fargo announced it was laying off 1,800 employees in its mortgage division, according to an Associated Press story appearing in the Mercury News. The reason? Fewer people are refinancing their homes. This is a curious situation, given the attractive, low interest rates currently available.
Something doesn't quite connect here.
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