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) -- There is a lot of forward-looking opinion about recovery in the real estate sector, but much of the talk is just opinion. The data continue to have some negative features.

Most recently I wrote

an article


about the likelihood that the bottom of the housing market had not yet been reached with respect to average prices, although some markets look more promising than others.

In the last couple of days, more data have been in the news. Here is a summary.

U.S. Housing Market

According to Prof. Robert Shiller of Yale University, the recent price increases for existing home sales has been accompanied by unrealistic expectations. In his monthly Op Ed


in the

New York Times

, Shiller reports on survey results from 309 home buyers in June and July. Home buyers were from four cities in different parts of the country.

One question had astounding results. The average expectation for annual gains in house value over the next 10 years was 11.2%. That would mean that, in 10 years the average of expectations was a gain of 189%: Buy a house worth $200,000 today and in 10 years it will be worth $578,000.

Compare that to the 10-year interval leading up to the peak price in June 2006. Using the Case-Shiller Composite-10 Index, the average value for a $200,000 house in June 1996 rose to $323,271 by June 2006. Talk about bubble mentality.

The median expected return in the survey was 5% per annum. This would produce a $325,780 value in 10 years, almost exactly the same return as the recent housing bubble.

If this survey result is representative, it is clear that more than half of the home buyers are delusional. In my opinion, if this type of nominal return had occurred, the inflation-adjusted return could well be negative.

In other news, the National Association of Realtors



that mortgage defaults are moving up the food chain. The Mortgage Bankers Association reported that 58% of foreclosure starts in the second quarter this year were prime mortgages, up from 44% in 2008.

Meanwhile, Renae Merla of

The Washington Post

has written

about the rush of major banks to recast hundreds of thousands of mortgages for struggling home owners.

If past experience is any guide, a significant percentage of these refinanced mortgages will ultimately end up in foreclosure anyway. The same article quotes Moody's as forecasting another 2 million foreclosures will occur this year, on top of 4.4 million others that have occurred since 2007. This year is not expected to end the pain.

also quotes Stan Humphreys, the chief economist for Zillow, who says foreclosures are unlikely to level out until late 2010.

According to an

Associated Press


by Mae Anderson, cited at

, a survey of economists released by the National Association for Business Economics predicts a 2% rise in U.S. home prices in 2010.

Although this would disappoint the delusional home buyers of 2009, it would be a far better result than the further price drops of up to 25% predicted by some. But, even if true, this does not describe a "V" recovery for housing.

Global Housing Market

The situation is not as bad for the global residential real estate market. The

latest report

from The Knight Frank Global House Price Index shows that nearly 50% of all global markets showed price increases in the second quarter of 2009.

Less than half that number (22%) showed price declines year over year greater than for the first quarter of 2009. Thus nearly 50% are showing price growth and only 22% show price declines accelerating. By comparison, the

first-quarter report

showed 33% of the markets reporting price increases. The first-quarter report does not state how many markets had accelerating price declines.

U.S. Commercial Real Estate



in the

New Orleans City Business

provides the following comments on the commercial mortgage market:

"The Mortgage Bankers Association's (MBA) second-quarter 'data book' on commercial real estate showed some signs of life in commercial mortgage originations but pointed to dismal numbers in unemployment, gross domestic product and building transactions to make the case that 'the point at which things are no longer getting worse and are about to start better is also the point at which things are at their worst.'

"Anirban Basu, CEO of the Sage Policy Group in Baltimore, said one of the main ills plaguing the commercial market is 'the excess supply of space in an economy that's lost over 7 million jobs, and continues to lose jobs at a feverish rate.' "

Mortgage loan originations in the first quarter of this year were down 89% from the 2007 peak, based on the MBA Origination Index. In the second quarter, the index improved to down 83%.

Other MBA data includes retail vacancies at 17.6% and office vacancies at 18.5%, both multiyear highs.


on these items at

called the news signs of a "dismal commercial market recovery."


With all the hope for a "V" shaped recovery, the data indicates that such is not likely to be the case for the real estate sector. With other economic activity indicators also showing reluctance to reach or leave bottoms -- such as employment and consumer spending -- one has to wonder just how robust any other "V" efforts can be until there is support from these areas.

-- Written by John Lounsbury in Clayton, N.C.

John B. Lounsbury is a financial planner and investment adviser, providing comprehensive financial planning and investment advisory services to a select group of families on a fee-only basis. He worked for 34 years with IBM, and spent 25 years in R&D management and corporate staff positions. He also was a Series 6, 7, 63 licensed representative with a major insurance company brokerage for nine years.

Specific interests include political and economic history and investment strategy analysis. He holds degrees from the University of Vermont, Columbia University and the Illinois Institute of Technology, where he studied chemistry, physics and mathematics. He is a contributor to Seeking Alpha and his own blog,