That's Miami, spelt with a V

The US housing market is gradually picking up steam. It looks like the recovery has a long way to go. My index of household formation to housing starts has run in positive territory for several years, quite the opposite of its performance in the years prior to the bust. To me this is a pendulum that is swinging back or a tanker starting to turn. It takes time for the forces that drive prices to build up but once they get going it becomes a self-feeding loop. As prices bottom sellers hold back to see if they can get more; better prices mean more willing lending by the banks; as prices rise more people come out of negative equity enabling them to sell; successful sellers are freed up to move to other cities to find jobs; consumer confidence builds as people perceive their net worth rising again. House prices are now rising at a faster pace than the 30-year mortgage bond rate, something that we haven't seen for some time. This creates positive leverage for buyers and affordability is at the highest level for just about ever. Sure getting a loan is hard but bank credit committees are gradually chilling out and in due course competitiveness will drive them to extend more credit. The recovery is by no means universal with some cities still in the doldrums. But places like Miami and Phoenix are seeing V-shaped bounces. The QSL is from Radio Miami International, signed by the founder, Jeff White. It was heard in London in 1995. For quite a few years I used to travel to Miami on business and always liked the place.