The Housing Headlines Got It Wrong

"Existing-Home Sales Rise as Prices Plummet" -- Washington Post. "Property Sales Pick Up as Prices Plummet" -- Financial Times. "Wave of Foreclosures Drives Prices Lower, Lures Buyers" -- Wall Street Journal.

In every one of these pieces the emphasis is on the price drop, as if somehow that is a continuation of the problem in the housing market. None of them states the real obvious: Just like any other good, when you cut the price, people find a way to buy.

This price-cut attraction is at odds with what the homebuilders have been saying forever. They have said over and over again that the issue isn't price at all.

We now know that it was always about price. If the homebuilders were willing to lose some money on houses and move their inventory, they could have. They simply don't want to, or their covenants don't allow them to.

But the existing homes, owned by people, will move, either in foreclosure or in the inevitable need to move, by prices going down. We now have "price discovery," which emboldens you and makes you -- at last -- feel you are not overpaying. First time in three years anyone has felt that way.

All of this is great news if you are trying to figure out when we get to the bottom of the issue that has brought this nation to its knees: house price depreciation. You can't get a bottom in homes until homes trade and they weren't trading when the sellers were holding out.

Also, this number shows there is mortgage money -- another canard -- if you want a home.

Further, I don't expect any house price appreciation. We don't need any. We just need inventory to trade, WHEREVER IT TRADES, to stop the process of whole neighborhoods being pulled down by the marginal, and margined, sellers.

ALL JIM CRAMER BLOG ENTRIES | POST A COMMENT | READ COMMENTS  

---

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. To order Cramer's newest book -- "Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer)," click here. Click here to order "Mad Money: Watch TV, Get Rich," click here to order "Real Money: Sane Investing in an Insane World," click here to get "You Got Screwed!" and click here for Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he appreciates your feedback and invites you to send comments by clicking here.

TheStreet.com has a revenue-sharing relationship with Amazon.com under which it receives a portion of the revenue from Amazon.com purchases by customers directed there from TheStreet.com.