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Been Down So Long That Flat Looks Like Up to Us 

Happy days are here again! Well, perhaps not "here," but somewhere. Maybe.

Happy days are here again! Well, perhaps not "here," but somewhere. Maybe.

The lead story of this morning's New York Times trumpeted the news that the Case-Shiller Index of home prices has stopped falling for the first time in three years. The composite index of prices in 20 major urban areas showed an uptick in eight cities. Overall, the index showed prices nationally were flat.

"We've found the bottom," proclaimed Mark Fleming, chief economist for First American CoreLogic, a data firm.

Many places, though, appear to be still groping for the bottom. The cities where the boom was biggest, such as Las Vegas and Phoenix, continue to show declining home prices.

Another one of them was Portland, where home prices fell 16.3% in May, according to Case-Shiller. That's the 17th consecutive record monthly decline, and the biggest monthly decline for Portland in the 22-year history of the index.

If the picture is grim in Portland, the one in Bend is downright scary. We don't have Case-Shiller data for Bend, but the Central Oregon Realtors Association has just released its numbers for the second quarter of 2009. According to the Portland Housing Blog, Bend's average sale price for the second quarter of 2009 was $253,400, down 32% from the same quarter in 2008. Since the market's peak in the third quarter of 2007, Bend home prices have plunged 43%.

Are our toes touching bottom yet? The Eye says no. There's still a huge backlog of unsold homes built on spec back in the zany bubble days, especially at the higher end of the market.

We're also a little skeptical that the national "rebound" indicated by the Case-Shiller data represents more than a dead cat bounce. Some experts are saying that what's driving the rebound isn't ordinary folks buying homes, but investors (i.e. vultures) snapping up foreclosures and bank-owned properties in hope of turning them over for a quick profit.

"Brad Hunter, chief economist for Metrostudy, a research firm, said the new home numbers appeared to illustrate less a return of [ordinary] buyers [and] more a resurgence of investors and speculators," The Times wrote. "Metrostudy's own data showed that the number of buyers during the second quarter who actually moved into their new house declined 2.6 percent.

"'Investors are turning right around and putting the houses on the market for sale or for rent,' Mr. Hunter said. 'What appears to have been an absorption of excess inventory can be just a changing of ownership of that inventory.'"

In other words, instead of a rerun of "Happy Days," we could be watching a rerun of "Flip That House."

What troubles us most about the situation both nationally and locally, though, is this question: Where the hell are people going to get money to buy houses? They've seen the equity in their previous homes (if they had any) vaporize, their other investments have gone belly-up, and many of them have lost their jobs or fear they soon will. It takes money to fuel a home-buying boom, and we just can't see where it's going to come from.

Looks like we're going to be treading water in the local real estate pool for quite a while yet.

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