The headlines scream that housing sales are rebounding. Are house prices rising? Yes, a bit.

AP

Granted recent price increases are helpful but after a 40 percent drop in value, a 5 percent gain is a pretty hollow victory. Yes better, but not good to be sure.

Still, some are shouting that it is a new dawn for real estate. Even noted economist Robert Shiller wonders if a new housing bubble will come to pass with low interest rates and subsidies for buyers. But if one looks below the numbers, all is not well with housing and investors would be well advised to keep this in mind.

Yes, housing sales are showing signs of stabilization but if you look closely, mostly contracts are closing at significantly discounted prices. These are distressed properties. Even with some rebound in prices, many of these properties are still significantly under water with mortgages far exceeding current market value.

In other words, someone is losing money. Additionally, there remains a massive backlog of properties (some suggest years of backlog) that still need to be moved out of inventory and placed on the marketplace. Financial institutions are hesitant to release these properties at drastic price reductions, but they will need to eventually as they seek to shore up their balance sheets. A huge supply of properties looms on the horizon.

The problem is the trade-up buyer simply is not buying. They are having difficulty selling their property for a price that will allow them to take advantage of the discounted properties available in inventory. And in this cycle, the foundation of a strong housing market will be the trade-up buyer, especially since the new-buyers ranks will certainly be smaller given tightening credit standards.

Housing will recover. But as always is the case, semantics matter. And in this cycle, recovery will have a different meaning. With a consumer impacted by stock-market losses and real-estate values erosion, the impact will be lasting. This has consequences for investors as it will likely affect stock market returns and the valuation levels assigned to real estate related stocks. Expect real estate and related assets to grow at some point; but ratchet down your expectations. Slow growth will likely be the order of the day.

So tread carefully when you read headlines of rebounding real estate sales. The economic news over the last several months suggests things are better but not good. Keep this in mind as you digest data, opinions, and projections.

And take a moment to look around you and absorb the reality on the ground; the world is simply not what it used to be.

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Michael A. Yoshikami, Ph.D., CFP®, is Founder, President, and Chief Investment Strategist of YCMNET Advisors, Inc., a registered investment advisory firm (www.ycmnet.com). Michael oversees all investment and research activities of YCMNET. He is a respected lecturer speaking frequently on market issues,  tactical asset allocation, and investment strategy.  He appears regularly on CNBC and CNBC Asia and can be reached directly at .