How fragile is our housing economy right now? How soft is soft?
I think it's fragile. The stuff we know is that housing starts are going nowhere. We're not getting any boost to the economy from that, and that's always been the engine that drags us out of these recessions. It looks like a bottom. It looks like there's the beginning of a recovery in place in house prices, and you can see the volume beginning to pick up. But there's a lot of inventory out there, and a lot depends on psychology. It takes guts to buy a house, and particularly in a bad economic environment, which we're back into.
Things were looking better last fall. What happened?
Well, the government's housing tax credit caused a lot of activity in October, November. We stopped hemorrhaging. And housing prices are down 30 percent nationally [from their peak]. That's bringing people back. [Yet] we're in this big downwardly sticky thing. If you look at the total number of houses that people would like to sell, it's a very large number. But owners won't sell at any price—they're holding out. The stock market doesn't help.
Should we focus on the optimism that comes from comparing home prices year-over-year, or should we look at the 90-day moving average?
Well, I like the 90-day moving average. It's up, but very modestly. The housing market is basically flat. It's waiting for something to happen.