It is a sign that people are clinging to the hope of a real estate recovery. We are not yet at the bottom.
While I understand the above chart is meant to make a high level point (rather than show exactly where we are), I thought it would be interesting to overlay the Case Shiller home price index on top.
We are not as early in the process as the chart would indicate (i.e. we've already fallen much further), it appears we still have plenty of risk remaining to the downside.
Another way to view this is Case Shiller 10 vs. inflation (CPI) over this time.
Closer, but still about 20% "too high" and during "despair", it tends to break through.
Source: S&P / BLS
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