The Fed’s Beige Book said the obvious: "Continued growth … mid-July through the end of August, but with widespread signs of a deceleration." Not double-dip, not yet. In the absence of fearful dippers buying bonds, the 10-year T-note rose to a one-month high 2.8 percent, although doing no particular damage to mortgage rates, still near 4.5 percent.

A great many people now write about housing, many of the strongest opinions held by people who gained their knowledge by living in a house, and driving past other ones.

The new rage: "Just let housing go." These people do not seem to remember the benefits of letting Lehman go, the simple life without banks and their deposits.

The Fed’s Beige Book said the obvious: "Continued growth … mid-July through the end of August, but with widespread signs of a deceleration." Not double-dip, not yet. In the absence of fearful dippers buying bonds, the 10-year T-note rose to a one-month high 2.8 percent, although doing no particular damage to mortgage rates, still near 4.5 percent.

A great many people now write about housing, many of the strongest opinions held by people who gained their knowledge by living in a house, and driving past other ones.

The new rage: "Just let housing go." These people do not seem to remember the benefits of letting Lehman go, the simple life without banks and their deposits.

The most common error among nouveau experts is to confuse housing with the stock market. The "let it go" crew insists on this sophistry: When home prices go low enough, buyers will return.

Too many sellers of IBM stock, and down the price will go to a value attractive to buyers. Correction complete, IBM will be liquid in global markets 24/7, and a new bull market will begin. Supply and demand. Dontcha know. Simple.

There are too many houses. So stop building, finish foreclosing, let new households buy up the excess in a couple of years, and it’s all fixed. Easy. Just let housing go.

For every complex problem there are several simple and mistaken solutions. The trouble with houses, different from stocks, begins here: The damned things are where they are, and so are their markets.

Can’t move ’em to the shortage in Saudi Arabia, and Saudi Arabia ain’t coming to them. Beyond immobility, they are unique: No two are the same, and beyond location there are huge differences in size, type and price.

Since housing rolled over five years ago, today’s prices are higher in 29 states. Prices fell as much as 10 percent in 12 states, and as much as 20 percent in four more: Massachusetts, Minnesota, Rhode Island and New Hampshire.

The last, pesky five: Michigan, down 27 percent; Arizona, -29 percent; Florida, -31 percent; California, -35 percent; and Nevada, -48 percent.

Exactly whose prices, where, would you next like to "let go," and how far? In the last year of stumbling economic and housing policy, prices fell in all but 10 states.

Then consider some wrinkles in ol’ supply and demand. By the general factoid, we create 1 million to 1.5 million new households each year, and will therefore absorb excess supply. The lowest guess I’ve seen for household formation during suppressed 2010 is 600,000, but my hunch is closer to zero.

Illegal immigration that used to run close to 1 million annually may have stopped altogether (net of move-back).

The demand side is further diminished by household credit damage and unemployment, and at my desk the one creditworthy borrower in four was shut out by today’s absurd underwriting constraints.

On the supply side, unless somebody shoots ’em, builders are going to build 400,000 new units — cheap and easy, in part because foreclosure-recycled finished lots don’t cost any more than farmland.

More supply: As the owner-occupied fraction of housing falls from near-70 percent to the low-60 percent range, at least 5 million investor-buyers will have to be found. And they’ll have to pay cash because investor credit is choked, especially at banks.

The ex-owners leaving these homes will live somewhere, but we have no idea how many will remain independent households and how many double-up.

Deeper into supply … we don’t know what it is. We really don’t know how many habitable dwellings there are in the U.S.

In hard times, habitability is a less fussy distinction. Housing supply shrinks by wear-out, obsolescence, and bad economics-of-fix; however, in tough times the life of a house can be extended a long, long time.

Then slice supply by price range. The top half of every micro-market in the nation is in bad shape, in part because of the near void of jumbo financing. These are the rich that we’re going to tax and eat, for heaven’s sake! We’re counting on them!

So, you’ve got some shares in IBM to sell? Say, where are you? Gee, whiz. There’s really no market for IBM there.

You want to margin your shares, to hang on for better days? Given value there, and market conditions … credit, forget it.

Housing needs and deserves emergency help, and some imagination. Right quick.

House Price Appreciation

State  1-year Quarter 5-year Since Q1 ’91
1. California 2.9 0.14 -34.95 68.46
2. Iowa 1.54 0.61 5.55 99.81
3. Texas 1.43 1.02 15.88 93.5
4. Washington, D.C. 1.42 -6.71 3.48 221.93
5. Alaska 1.38 0.56 11.75 120.72
6. North Dakota 0.71 -1.44 20.56 121.22
7. Kansas 0.47 2.01 6.91 96.94
8. Virginia 0.33 1.19 0.42 118.06
9. Arkansas 0.28 2.08 4.46 85.59
10. Oklahoma 0.22 0.27 14.39 96.32
11. Louisiana 0 0.76 16.6 130.62
12. Nebraska -0.07 1.02 2.39 94.11
13. New York -0.12 -0.04 3.05 111.69
14. Colorado -0.25 -0.98 2.87 169.79
15. Tennessee -0.26 1.45 7.44 90.98
16. Kentucky -0.33 0.21 5.27 89.35
17. West Virginia -0.5 0.71 8.76 87.32
18. Massachusetts -0.58 0.15 -11.98 122.58
19. Wyoming -0.96 1.58 20.81 192.78
20. Mississippi -0.99 0.81 7.55 80.1
21. Pennsylvania -1.03 -0.85 6.77 92.51
22. Ohio -1.33 -0.89 -8.21 58.8
23. Missouri -1.35 0.59 -0.08 91.65
24. South Dakota -1.4 -0.61 10.43 124.09
25. New Jersey -1.41 -0.17 -5.41 126.33
U.S. -1.6 0.9 -4.41 94.28
26. Indiana -1.85 -0.3 -1.92 58.76
27. Montana -2.05 -0.83 15.08 202.46
28. Illinois -2.46 0.35 -5 87.13
29. Minnesota -2.51 0.77 -11.72 117.69
30. Maryland -2.58 1.87 -7.33 118.64
31. Connecticut -2.6 -0.35 -6.7 74.86
32. Georgia -2.79 0.91 -7.05 70.56
33. North Carolina -2.96 0.74 8.95 90.17
34. Rhode Island -2.96 -1.21 -18.67 88.89
35. Wisconsin -3.06 0.51 -2.94 112.5
36. Oregon -3.51 0.46 4.33 180.13
37. Hawaii -3.68 -0.4 -5.88 79.53
38. Vermont -4.02 -2.96 5.52 108.43
39. Washington -4.14 -1.24 6.53 137.86
40. South Carolina -4.19 -0.73 5.81 85.78
41. Utah -4.37 1.62 11.23 161.76
42. Alabama -4.9 -1.07 6.73 85.3
43. New Mexico -4.97 -2.27 10.33 119.34
44. New Hampshire -5.15 -0.12 -14.97 97.87
45. Michigan -5.38 1.18 -26.58 48.66
46. Maine -5.41 -2.4 -4.4 106.26
47. Florida -5.87 -0.95 -30.96 84.64
48. Nevada -7.19 0.78 -47.53 33.36
49. Delaware -7.53 -1.13 -2.9 90.5
50. Arizona -8.24 -1.68 -28.63 89.36
51. Idaho -10.99 -0.94 2.36 111.39

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