Ira Artman

Banks, Home Prices, Home Sales Are 'Just Fine'

Thanks all for comments. There are many problems, I think, with my analysis, just as I think that it is NOT a good idea to take comfort from claim that "majority of banks are well capitalized."

As I noted at open of piece - so what? That's not - and never was - the issue.

Believe that the "relationship" that I charted in piece, while remarkable, ignores the problem and concludes that things are fine, as noted.

Key problem - such as it is - with my analysis is use of the Freddie CMHPI, which is virtual clone of FHFA/OFHEO index, and both of these include prices ONLY of homes financed by conforming mortgages.

At peak, however, believe more than half of the mortgage originations were non-conforming. This began as a subprime crisis, and then became a jumbo and an AltA crisis. These borrowers (at one time half of the market) had no financing alternatives, and it is their removal from the market, and struggles to get them back, that has led to the mess.

All of which is missed if you use CMHPI or FHFA/OFHEO. Or, think things are fine if you take comfort in fact that majority of banks are well-capitalized.