In my recent January home price data roundup, I included a graph of home prices during the early-1990s bust to illustrate that bouts of price strength were common even during a protracted downturn. A smart reader pointed out that mini-rallies were more than just common — they were to be expected as part of the seasonal price cycle.

With the exception of 1993, which was the most brutal year from a price perspective, the San Diego housing market experienced a brief rally every spring throughout the entire downturn. Every rebound probably provided a glimmer of hope that the bust was over, but in each case, prices went on to sink to new lows until the correction finally ended in 1996.

The lesson here is that because they tend to occur during bull and bear markets alike, spring home price rallies don't appear to have a whole lot of predictive value.

— RICH TOSCANO