Are Housing Prices Really Schrödinger’s House Cat?

This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.

Schrödinger’s cat is a (hopefully) unperformed experiment in quantum physics.

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Schrodinger’s Equation For A Single Particle In Three Dimensions (Simplified)

We don’t know if the cat in question is dead (due to poisoning) or alive or DEAD AND ALIVE … UNTIL we open the box.

Just like housing prices. We won’t know if housing prices are dead until The Federal Reserve stops pumping accelerant into the housing box.

If we look at the spread between major housing markets (Case-Shiller 20 Metro YoY) and a broader index (FHFA’s Purchase-only Home Price Index YoY), you can see that the major market “bubble” ceased when The Fed stopped QE3.


Another sign is the decline in houses begin flipped YoY.


Since The Fed seemingly is pumping accelerant into the housing market, we can only guess as to the status of Schrödinger’s House Cat.



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