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Housing May Be Stable, but Not in ‘Full-Blown Recovery’: Ritholtz

Chris Nichols
Friday, 23 Nov 2012 | 12:11 PM ET

Housing has been trying to show a few reasons here and there to suggest the sector's worst days are behind it, but you still won't necessarily find a lot of uber-bulls out there.

Now, several stocks in the group have had good runs in 2012, led by PulteGroup, the best performer on the S&P 500 with a gain of 165.5 percent since the start of the year. Lennar has been another star, climbing 93.9 percent and coming in at No. 5 on the list, FactSet data show.

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However, regardless of the state of the stocks, there remain plenty of skeptics on housing who are questioning just exactly how healthy it is. Barry Ritholtz, chief executive of FusionIQ and founder of the blog The Big Picture, sees some of each side of the argument.

"Currently, housing is one of the few bright spots in the economy," he says in the attached video. "The problem with housing continues to be it's not an organic recovery, or stabilization, to use a better word. The [Federal Reserve has] driven rates down to inconceivable levels."

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Foreclosures, Ritholtz says, are now rising after banks had put many of them on hold to sort out the robo-signing debacle, and he's "expecting that to continue to gather momentum."

"I'm comfortable saying housing has stabilized, but I'm not buying the 'we're in a full-blown recovery' meme," he says.

By spring, we should know which side is right on housing — that is, whether a legitimate turn is upon the market or more weakness lies ahead, he says.

Investors, economists and homeowners themselves have no shortage of data to scour every month. Earlier this week, for example, the Commerce Department reported that housing starts rose in October to a seasonally adjusted yearly pace of 894,000, up 3.6 percent from the prior month. Apartment construction was the strong metric, while single-family home builds eased slightly. However, single-family construction permits were at a multi-year high.

Let us know what you think. Has housing stabilized? And what are your thoughts on the mortgage-interest deduction? Should it be left alone or eliminated?

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