I read through the usual suspects in the mainstream media yesterday after the Case Shiller numbers were released and saw headlines such as "Home Prices Flatten in October After 5 Months of Gains" and "Mortgage insurers rally after housing data" and wondered just how many of these reporters and analysts actually bothered to look at the data versus repeating sound bites. This has been a bad three quarters for the fundamental bears, but there is absolutely no macro or fundamental reason to turn bullish. As a matter of fact, the only reason I can see to buy stocks is that the stock prices are going up. That, in and of itself, should give one pause.

Let's take a close look at the "raw" Case Shiller numbers, not the seasonally adjusted ones for which I cannot source the method of adjustment for seasonality. Don't worry, if one looks at the data over a long enough time frame, you can easily recognize the patterns of seasonality, and more importantly notice how dramatic they have become, leaving open to question how effective the seasonal adjustments are, whatever they are.

Starting with a bird's eye view of key markets over two decades you can see that the housing boom was enormous and the crash was severe, but nearly all major markets ticked up significantly over the last few months, although we are still at roughly 2003 pricing levels, having lost about 7 years' appreciation. The question is why. Well, the US government has put more money and resources into re-blowing the residential housing bubble than any other time in its existence.