Posted by Leonard Steinberg on January 20th, 2012

To-day’s headlines (besides Newt’s disgust at being asked about his moral standards when he and his party have never considered that to be an issue in selecting a president) is the news that sales of previously owned US homes rose to an 11-month high in December 2011 and the supply of properties on the market tumbled to a near 7-year low, pointing to a recovery in the housing market.

So as much as political pundits and financial experts have tried to point fingers and intellectualize the housing crisis, it appears at the end of the day that this housing recovery, just like most recoveries, is cyclical too and not reliant on some governmental or presidential magic wand. The length of any cyclical turnaround depends greatly on the size of the bubble:  We had a huge bubble, mostly comprised of excessive over-building and speculation, and a banking system that ran amock, fueled by a government that pushed unqualified buyers and turned a blind eye to banker abuse. So the price we all had to pay was huge. And the time it takes to correct a bubble of this size is not quick or easy.  Some banksare making the mortgage process for strong properties and buyers absurd: but smart private investors are stepping in and taking away that business.

Now comes the bigger question: as the recovery phase of the cylce begins, do we re-enter the cycle of excess/stupidity that caused the 2007/8 bubble in the first place by not enforcing laws to prevent excessive bubbles?