The Housing Recovery Rests on an Unstable Foundation

New York City, Phoenix, Las Vegas, San Francisco and even Detroit have seen substantial yearly housing price increases.

In Atlanta, homes are selling in the same week they're listed. In Washington D.C., multiple bidders recently drove the price of a run-down home to double the asking price.

The housing market has gone from financial rubble to what some analysts describe as another bubble.

Home Prices Growing As Fast As Before The Housing Collapse: Case-Shiller

The most widely followed measure of home prices, the S&P/Case-Shiller indexes, rose at its fastest rate since the summer of 2006 ...

Forbes, March 26

It's true that home prices are still nearly 30% below their mid-2000s peak. Yet the recent surge has Robert Shiller of the Case-Shiller Home Price Index concerned about a mini-bubble, according to CNBC.

In a March 26 CNBC interview, Shiller likens today's trend to what happened in the 1930s.

We're living in a totally artificial real estate economy. We have the Fed with QE-3 ... buying billions [in] mortgage securities, we have Fannie and Freddie which are under government conservatorship, and they and F.H.A. are supporting most mortgages ... I'm not in with the chorus of people saying [the housing crisis] is over.

One thing you learn from history is that bubbles can occur at any time. I like to remember the stock market bubble. From 1933, the very bottom of the depression, to 1937, there was no real substantial recovery in that interval, just the stock market went up.

In 1937, the stock market reached another top, which led to another economic downturn.

Will history repeat itself? Is the housing market headed for another collapse?