Can we call the housing recovery “official”? That, of course, depends on what we mean. You can’t really call a housing recovery official on the national level because all real estate markets are local. Even in the best of times there are always particular local markets lagging.

But if we were to consider national numbers, it's difficult to argue that housing – at least with pricing – has (and is) recovering. We have reported many times over the past months that data from the leading real estate service firms – Clear Capital, CoreLogic, Zillow, Case-Shiller – show prices rising in many local markets.In addition, we've also been reporting on analysts changing their price estimates. The analysts at JPMorgan Chase are the latest to jump on the bandwagon, at least for the long term. Over the next four years, JPMorgan sees home prices moving ahead 12 percent at the national level.

Over the short term, though, JPMorgan remains negative, believing prices are still destined to decline 2 percent nationally. JPMorgan points to the specter of shadow inventory, a subject we have addressed frequently. JPMorgan estimates that 4.8 million properties are distressed, REO, or at least 90-days delinquent. Banks ramping up foreclosure processing means more of these properties will hit the market, thus pressuring prices lower.

It's a tidy theory, yet it hasn't materialized – and may never materialize. Economists at have been studying residential real estate trends in various markets across the country. They've found the share of distressed sales is down from June 2011, and the share of foreclosures are down significantly.You could argue that banks still haven't fully ramped up foreclosure operations after last year's robo signing imbroglio. That could very well be the case. The more thoughtful rejoinder is that banks are simply proceeding in a rational, profit maximizing manner. They're processing more short sales and they are prudently selling REO property.

Home builders also see distressed property as a receding concern. Many builders – Beazer Homes, Meritage Homes, Hovnanian Enterprises – have recapitalized their balance sheets by issuing more shares into a rising stock market. These builders are using their new funds to purchase additional land and to expand production.In many markets, it's no longer a question of when the housing recovery will begin, but how it will progress. If JPMorgan is right, and home prices appreciate 12 percent over the next four years (which works out to 2.9 percent annually when accounting for compounding), I think most of us would be satisfied. That means prices would be moving at a rate slightly higher than the rate of annual price inflation. In other words, residential real estate will once again be offering a positive rate of return.

Courtesy of Jessica Regan.

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