A lot of people think that the housing crash is underway. I tend to think they're a month or so ahead of things, that the ice is starting to creak but hasn't yet cracked. This interesting tidbit appeared in Peter Coy's column in Business Week
Would you believe that home values are up?
According to Zillow.com, home values rose 4.8% in the third quarter in the 36 major metropolitan areas covered by its Zindex. That may come as a surprise if you've been reading about falling sales prices, but there's a good explanation for the discrepancy. ... Zillow's index includes updated estimates of the values of all homes in an area, not just the ones that were sold. That's important because the sales price indexes can be skewed by changes in the mix of homes sold in a period. ...
This ain't just some technical debate. Richard Berner of Morgan Stanley, who argues that housing will "rust not bust," points out a big skew in the Census Bureau's widely quoted figure of a 9.7% decline in median new-home prices from September 2005 to September 2006. As Berner points out, the sales of new homes priced between $300,000 and $400,000 fell 44% over the past year, while sales of those priced under $300,000 fell only zero to 20%, depending on the price bucket. In other words, the sales mix shifted to cheaper homes, and that pulled down the median.
The economic stats are very hard to read. What's not hard to read is the nervousness.