Thursday, August 27, 2009

More Good News

The New York Times yesterday had the most positive article on real estate activity that I've seen there in many, many months. My interpretation was that the dreaded "W" or "L" recoveries may be replaced by a more robust resurgence. The "capital letter" recoveries suppose that the recent upticks in real estate and the stock market will be followed by either a second downturn (as happened in the Great Depression) or a period characterized by bumping along the bottom of the economic cycle.

Those who are now more optimistic seem to think that all the stimuli provided by the government will boost real estate sales to levels that are more than were expected. It may be that the stimuli are even too great, or incorrectly aimed, but they may do their job anyway. As most experts will admit, the effect of psychological factors in economics is far greater than its mathematical bases would predict. We have all known for a long time now that there is a crisis of confidence in our country, and that something would have to happen to get us off the fence, and spending again.

I still submit that it's the weather. It's a good an explanation as anything else.