From Reuters:
"The S&P/Case Shiller composite index [XLS file] of 20 metro areas fell 1.4 percent in April from March and slumped by a record 15.3 percent over the year.
. . .
The 20-city month-over-month decline was the smallest drop since the August-September 2007 period.
S&P said its composite index of 10 metro areas slid 1.6 percent in April for a record 16.3 percent annual drop.
Home prices in a dozen of the metro areas have fallen for eight straight months".
12 comments:
Funny,
We're almost done with the selling season and the best they can do is brag about how the decline rate is slowing. Normally this is peak appreciation time of year (for the times Case-Shiller) just reported on.
Late summer is normally flat and October through February often has a small decline.
So taking seasonality into account, this is a really bearish report.
Got Popcorn?
Neil
I have been shopping for a house in 22042, 22043 and 22180. Inventories are very high, there are still many sellers totally unrealistic about the market and plenty of foreclosures. 22043 is in free-fall, 22042 is experiencing a steady decline and 22180 is retaining it's value somewhat, but still declining.
I, personally, don't see the market bottoming out in those area codes for at least another 12 months until all of the excess inventory is moved. With that in mind, we re-upped our rental for another year, are going to continue saving for a better down-payment and will take another look at the market in the winter.
I thank my luck stars I did not buy 2 years ago.
I love cnn spin.
"4 steps to a housing rebound
1:42pm: The pain that homeowners and homebuilders are feeling now is a sign that things are going to get better. more"
Wow - you all ought to see the amount of handwrining and denial taking place in the comments over at calculated risk. Suddenly all those early signs we all saw (increasing sales in super bubble areas), easing in credit restrictions here and there, etc.) COULD (notice I said COULD, not DOES) actually mean that the worst of the steep declines is over, and a period of more modest declines (not a recovery mind you, just more MODEST DECLINES) be just around the corner.
In the mean time, posters to sites like CR and especially the california based sites are going nuts screaming "knife catchers" and "dead cat bounce" - suddenly the its not over until PRICES DROP 70% crowd (yes there are people that pessimistic out there) are forced to do some serious soul searching. Even our west coast friend neil (wannabuy) is quick to come out spinning this Case Shiller report to keep the huge declines going.
Unfortunately, there are a number of bubble sites out there that are absolutely infected with pessimism verging on absolute groupthink. In their minds, this thing hasnt even really STARTED. If you were to go over there and say something like "maybe the big declines are over, and more modest declines are coming", people would scream you out of the room. Over there, anything but the most negative outlook possible will not be tolerated.
Thankfully, it is not like that on this site. Harriet doesnt seem to have some hidden agenda and presents the facts as they are - no spin either way. We also have reasoned posters out there like Leroy, CRT, et al. who despite their different outlooks, arent afraid to state things contrary to their bullish or bearish opinions.
Whats my point in this rambling. My point is, we all need to be aware of the POSSIBILITY of the BEGINNING of the bottom coming, possibly sooner than many of us may expect. The reality is, the housing market is not as good as "puppydogs and flowers" Lance says, nor as bad as "economic riots" Neil says. Like it or not, one day there will be a bottom, and each day we wake up and log onto this site, we are one day closer to that mythical bottom whether we choose to accept it or not.
Thankfull, that bottom will be probably years wide before there is any rise again. However, for those of us more interested in buying a home than merely pontificating on bubble blogs, we need to be cognizant of the signs that indicate its may be sooner than some of us want to believe.
Food for thought...
The anonymous--
What you say is certainly true for some of the blogs-- I stopped reading Ben's blog a couple years ago because the commentary was just getting too nasty-- but in fact, Calculated Risk himself has been making just the point you did recently. It was just last week, I think, that he worked out the numbers to show that purchase of a single family house was at the point in some of the hardest hit areas that it was beginning to make sense for investors again. I think the extreme commentary over there is more than balanced by the very wise and knowledgeable commentary of several of the others.
None of us knows how this is all going to play out -- but we don't need to. We ourselves are the best source of the most important information: how much we can afford, how long we are likely we are likely to stay in the area, how secure our jobs are, how likely our salaries are to increase and how and where we would like to live. As long as we don't lose sight of those things, none of us is likely to go too far wrong.
the anonymous,
i think a lot of people, myself included, are just frustrated with housing and are letting out a little frustration on these sights. We almost got caught up in the frenzy and made a huge mistake. I almost listened to the hype and bought a home that would now be depreciating in value. When I saw 50 year old two bedroom condos nowhere near a metro in arlington for $450,000, and the second bedroom was 9X8, I figured something was wrong.
I read these blogs to share in the joy and frustration of the housing market, and from time to time post when something peaks my interest. That is the problem, the data is all over the place on housing. I try to keep myself informed, but it is frustrating. I don't think I am going to be able to buy a decent place until I'm in my mid 30's, even though I make a very good living. A lot of the "riot" people are just sharing in the same frustration.
I think people should post about whatever they want. If they think that a 70% decline is in the cards, let them vent. You can come right back that the bottom is here and you are getting ready to buy a new home. These blogs are fun for the anonymous comments, annonymous. If you don't like the style on one of the blogs, go to another one. Or keep yelling from the mountaintops your point of view. Maybe you will help someone out who needed another vantage point.
Thank you for the comment, you gave me something to think about. I do have to say, I agree with some people who say that if a house is not appreciating, you are losing money, because it is not keeping up with inflation.
I think were at teh midpoint. I thik with the economy and gas, were gonna slide about the same amount again, unitll next spring/summer. then it will stagnate for a while.
I bought earlier this year. My landlord wanted to sell the place that I had been living in for nearly 10 years and offered it a price beyond my means.
Since I had to move, I ended up looking around at a place to buy and to rent. My number one rule in this market was to buy something as close to rental (as a monthly cost) as possible. I negotiated a good price and in the District. What i ended up buying is costing a little more, perhaps about $200-to-300 I estimate, then a similar rent would cost. (that excludes condo fee which adds another 125.00 to it) With tax breaks, I may be ahead; I'll certainly be even, when compared to a rent -- at current market. .
But I got it at a good fixed rate, and it will need no improvements for many years. Has it declined in value? Most likely. Am I concerned? Not really.
I'll be here for at least five years, perhaps longer, and have an agreement that allows me to rent if I need to move. (Being able to rent a condo in this market is critical in my view. I would not have bought unless i could rent without restriction). Had I not gotten that, I would be renting today.
Although house/condo prices are continuing to decline, rental rates seem to be going up. I don't have any studies to back this up, but I think rentals close-in, near mass transport, seem to be going up. This is a pure eyeball observation, but before I bought I looked really hard at rentals. That was last November and December, and rents just seem higher now.
I thought hard about renting and, honestly, there would have been less worry if i had rented. But I think my buying approach provides a modest degree of protection. I don't know what the housing prices, rental cost, or mortgage rates will be in one year but if any of them are badly out alignment then a lot of things are messed up.
But at this point I feel there is no good advice that anyone can offer. The future is just too uncertain. The only thing to do is to make a decision on buying when you feel it is best for you and you alone. For those people who have taken a hit, you will be ok long-term. I owned a place in 1987 that I had put 20% down and it still fell below the mortgage by the early 1990s. It took some years, and i had to rent it for a time, but eventually it went well above purchase. Bad investment? Housing isn't the perfect investment, but I don't want to rent anymore.
Kob-- Bad investment? Sounds pretty good to me. My parents bought a condo near a peak. They were underwater for many years, but they weren't going anywhere. By the time they finally sold a few years ago to enter a retirement community they made a decent profit on it. But even if they hadn't made anything, they would have been satisfied. They wouldn't have been out any actual cash, since they'd paid most of the mortgage off by the time they sold-- and they had a pleasant, convenient place to live for 20 years.
As you probably know, condos are more risky than single-family because if you get a lot of defaults in the building, the condo fees are usually also in default (though theoretically the bank's supposed to pay them) and then you're stuck with the expense of trying to collect and usually the owners who aren't in default end up paying more in order to keep the property from deteriorating. The other thing is if you want to sell, potential buyers may have trouble getting a mortgage if there are too many rental units in the building.
But neither one of those things sounds like it would be much of a problem in your case-- your condo fees are low and you don't plan on selling.
Congrats on your new place!
The Anonymous--
I share your frustration with some of the bubbleheads. There is something about this subject that draws kooks like flies to a pile of you-know-what. I suspect many of them spent New Year's Eve 2000 holed up in caves, hunched over shortwave radios, waiting for reports of the end of civilization. That same apocalyptic mindset permeates many of their comments.
It's a shame, because I do believe we are experiencing the biggest bust of the housing market in a generation. Yet, somehow, we'll find a way to muddle through this -- it isn't the end of the world as we know it.
I enjoy reading a few tin-foil hat predictions. They remind me that there are people more paranoid than I am. It's also usually worth a laugh; though there are also the times when they seem to be more dead-on than I'd like.
wait, so if prices have dropped 15% why does the housing lender bailout only require principal reductions of 10%?
oh wait, the bailout was written by Bank of America lobbyists and BoA just bought Countrywide... nevermind, now i understand the 10% floor.
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