Poking Holes in The Depressing Housing Data

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Jeff Haynes / AFP / Getty Images

When the March Case-Shiller housing price data came out on Tuesday showing that prices in 19 of the 20 cities in the index had fallen, the news was unwelcome, to say the least.

Housing prices appeared to be double-dipping — unless you believed that the recent “recovery” was a real estate industry fabrication, in which case the new data simply confirmed the downward spiral that American housing had been on since 2006.

Now, I have a lot of issues with the Case-Shiller data series. (For example, the numbers for New York City–where I live, work as a real estate agent, and own two properties–focus on single-family houses, which are rare, and don’t include co-ops, which are a big piece of the local housing stock.) And did I mention that I’m a real estate agent and own two properties? So I tried looking for holes in the data. [time-link title=”(See photos on the tale of a lost mortgage)” url=http://www.time.com/time/photogallery/0,29307,2031786,00.html]

It’s well known that home sales are seasonal, so I started there. The volume of sales, and usually the pricing, drops in winter when the weather is grim. It rises in the spring, as it becomes more fun to go outside and shop for property, with the additional large kick that families prefer to move before fall to get the kids settled in for a new school year.

But even after adjusting for seasonality, as bloggers like Dirk Van Dijk of Daily Markets did, the numbers look grim: The adjusted prices were still down in 13 cities. (The outliers: Washington, D.C., with a 1.2% rise, Los Angeles, Miami, Phoenix, San Francisco, Seattle, and Tampa).

Another optimistic read is that the pricing numbers we’re seeing are distorted by distressed sales. That’s the argument of Brian Kelly, the president of BK Capital, who argues in a CNBC video that once you factor out people who are forced to sell by extreme financial crisis, prices are actually going up. And if it’s true, we’d presumably begin to see a slow recovery led by cash buyers looking to scoop up cheap properties as investments.

And with that, I finally uncover a glimmer of hope: According to NAR, cash buyers make up 31% of purchases overall. The Street.com notes the DataQuick stat that 45% of the buyers in Phoenix are paying cash; the number in Miami is running at around 50%.

Sure, these are probably wealthy foreigners buying vacation homes, helping soak up the oversupply of a burst bubble they created in the first place. But it is, as these things go, a start. [time-link title=”(Watch a video on foreclosures in Cleveland)” url=http://www.time.com/time/video/player/0,32068,700658086001_2034748,00.html]