On bubbles, dead cats, high houses

The party is long over, the hangover is just now over, the cleanup is barely over, and some people are passing the bubbly again — talking of new housing bubbles — but first how ’bout some nice iced tea?

What a decade for housing. And things will never be the same.

Buying a house as a never-fail investment? Gone. Romantic ideals of the American dream of homeownership? Forever tarnished. Renters seen as some kind of underclass? Get off your high house.

Casualties are still being counted, but for the most part the 11-year boom-bust-recovery is behind us.

After plunging 33 percent during the Great Recession, average housing prices are back at peak levels, now up 51 percent from the bottom, according to CoreLogic, a property and financial data firm based in Irvine, California.

The average house price is now 1 percent higher than it was at the peak in 2006, CoreLogic reported in “Evaluating the Housing Market Since the Great Recession.”

Frank Nothaft, the firm’s chief economist, recapped:

“Homeowners in the United States experienced a run-up in prices from the early 2000s to 2006, and then saw the trend reverse with steady declines through 2011. After finally reaching bottom in 2011, home prices began a slow rise back to where we are now.”

The recovery is no more evenly spread across the country than were either the boom or the bust.

“West Coast states, such as California, Washington and Oregon, are seeing some of largest trough-to-current growth rates in home prices,” Nothaft said. “Greater demand and lower supply — as well as booming job markets — have given some of the hardest-hit housing markets a boost in home prices. Yet, many are still not back to precrash levels.”

Do I smell a dead cat? As in a “dead cat bounce”? As in, even a dead cat will bounce if it falls far enough? That is, prices sometimes recover, briefly, sometimes significantly, before continuing to fall.

It would be the longest-wave bounce I ever heard of: 10 years. In fact, the last time the highly

technical term “dead cat bounce” came to my mind was nearly 10 years ago, when something similar was happening in California:

California’s median home price, which peaked at $484,000 in May 2007, had fallen to $322,500 by May 2008, a level not seen since February 2004. It sparked a homebuying rally.

Which raises a question my dusty minor in economics does not prepare me to answer: Can a dead cat bounce twice?

Anyway, here’s what happened nationally, according to CoreLogic:

Prices peaked in April 2006, reaching maximum decline in March 2011, and returned to peak just last October.

There were no dead cat bounces in the Oklahoma stats. Here’s what’s happened here the past decade or so, according to CoreLogic:

State home prices have appreciated 12 percent the past five years, which was exactly the appreciation from the pre-bust price peak to present.

Prices here dropped, yes, but they never crashed. Most structural damage to the market here was in the form of lost builders and developers who couldn’t get credit to keep doing business; those running on tight margins quit or retired.

Prices in Oklahoma fell 6 percent from their prebust peak in September 2008 to the bottom; and have appreciated 19 percent from the bottom to the present. Peace in our time. And somewhere, some financial genius, the kind who precipitates all bubbles and therefore all busts, is saying, “Hold my beer and watch this.”