NEW YORK (TheStreet) -- The 10-year Treasury seems to have stabilized around a 2.50% yield after having quickly retreated from the 3.00% level it kissed intraday on Sept. 5. The first time we saw 2.50% on this all-important benchmark was in August 2011, courtesy of the flight to safety during our second-most-recent debt-ceiling quandary. At that time, the Dow Jones Industrial Average was trading at 11,000 and the U.S. housing recovery was being graded in terms of how far underwater most homeowners still were.
Today home prices have rebounded in most major cities, with such places as Boston, Los Angeles, San Francisco and Seattle leading the charge. According to the S&P/Case-Shiller 20-City Composite Index, we lost 35% from peak to bottom nationwide (summer 2006 to spring 2012); since then we have bounced back by more than 20% from the lowest point. But we still have a long way to go. An additional 28% from here is needed to match the prices from seven-and-a-half years ago.
OK, but this all sounds like bad news, doesn't it? Not entirely.
Higher asset prices mean lower LTVs (loan to value numbers). In other words, a greater number (and value) of outstanding loans -- residential and commercial -- ought to qualify for refinancing. Just because rates are a little higher than they were six months ago doesn't mean the bulk of the housing move is necessarily behind us.When rates spiked in June, we started hearing that homes had quickly become unaffordable. Based on the simple metrics of prices and loan rates, that was true. However, there are other important factors to consider, like the increased amount of equity that families may be able to use to buy a new house. Two short years ago, that equity might not have been there.