Where’s the money?

Real estate loans at commercial banks (REALLN), 2002 to 2012, with YOY % change

Lots of happy news in the media recently about a rebound in housing; existing home sales rose 2.1%, construction spending increased 1.4% and developers are acquiring large parcels of relatively remote undeveloped land, in grabs reminiscent of the early 2000s boom times. I’ve previously expressed by scepticism, for reasons ranging from misinterpretation of the S&P Case-Schiller index to the large overhang of delinquencies that could suddenly (interest rate hike anyone?) enter the market, sharply increasing supply.

But here’s something interesting – the chart above shows real estate loans at US banks (REALLN) from 2002 to 2012, measured two ways: first, in billions of dollars (black line, left axis) and next in percentage change over a one year period (blue line, right axis). Overall real estate loans are still off -9.2% from their May, 2009 peak. Further, the year on year increase shows a very weak 0.7% increase, and since the recession ended in June, 2009 the average real estate loans at commercial banks has contracted by an average of -1.85 per month.

So what accounts for the so-called recovery in housing? Lots of big money is moving into this sector, reminding me of a previous post – nation of renters.

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