On May 5, the real estate data firm Clear Capital announced a “national double dip” in US home prices.
Should we be worried? Perhaps. But I’m looking at the data in a different way.
Take a look at Clear Capital’s tables of both the highest and lowest performing markets. While all quarter-on-quarter rates of change are down, some year-on-year comparisons still remain positive.
But what I’m most interested in seeing is the correlation between markets. In a normal housing market, the prices of homes in Phoenix, should not necessarily be highly correlated with homes in Portland.
The correlations don’t seem to be falling much – at least not yet. But when these correlations look more like the left side of the chart – and resemble a tangled mass of spaghetti, that will be a sign of a healthier housing market.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.