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Whereas pessimism was the leading dynamic for the majority of 2008, it seems that the Spring of 2009 brought a renewal of housing euphoria, albeit in a more limited and fragile sense.
In the U.S., the first time “homebuyer” tax credit, the “cash for clunkers” of housing, provided significant stimulation on the lower end, driving sales and a noteworthy bounce in prices.
In the U.K., the lowest interest rates in most peoples' lifetimes taken together with significantly corrected prices provided the impetus for a notable price bounce as well.
But how long can this government-sponsored stimulation last and what will happen if it doesn’t?
The most recent data is showing signs that the euphoric bounce is likely drawing to a close.
The Radar Logic home price indices clearly show that the U.S. home price bounce topped out in mid-summer and is now trending down nationally and even in some of the worst hit markets where prices have already dropped back to levels not seen in at least a decade.
Yet, on a month-to-month basis both series show only tepid increases.