The S&P/Case Shiller® composite index (graph here) for the month of December was released today.
"'The broad downturn in the residential real estate market continues,' says David M. Blitzer, Chairman of the Index committee at Standard & Poor’s. 'There are very few, if any, pockets of turnaround that one can see in the data. Most of the nation appears to remain on a downward path, with all of the 20 metro areas reporting annual declines, and eight of those MSA’s now with negative rates exceeding 20%. If one looks in detail at the annual return data, it can be seen that 13 of the 20 MSA’s and the two composites have been reporting consecutive record declines since December 2007. The monthly data follows a similar trend, with all of the metro areas reporting at least four consecutive months of negative returns.'
. . .
All 20 metro areas are reporting negative monthly and annual rates of change in average home prices. Boston, Denver, Los Angeles, San Diego and Washington D.C. are reporting a relative improvement in year-over-year returns, in terms of lesser rates of decline than last month’s values".
15 comments:
For what its worth, Case Shiller now produces a seasonally adjusted index.
http://www2.standardandpoors.com/spf/pdf/index/SA_cs_tieredprices_022445.xls
The price tiered index showed that DC high end prices actually increased a tiny bit (+0.14%)...the first increase seen in 15 months.
I just hope its more of a blip than anything.
You are referring to the seasonally adjusted numbers regarding the high end.
If you look at the regular numbers, the "high end" is down;
November, 2008: 178.71
December, 2008: 177.58
http://www2.standardandpoors.com/spf/pdf/index/SA_cs_tieredprices_022445.xls
Here is the link:
http://tinyurl.com/ataq4d
anonymous, that's very interesting. according to that, the low tier experienced the greatest percentage gains (which we knew) but now all three tiers have practically caught up to each other at a normalized index of 174.31, 174.59, and 179.11 for the low, middle and high end (of course their high end is more like Tabitha's 500k then CRT's 700k).
Very very interesting. In terms of percentage gain from 2000 say, the low end's gains have just now dropped down to less than the high end's gains. The question now is will the low-end drag the high end down with it, will they continue to go in concert with the percentage increases, or will the high end be able to maintain some of those gains based on equity extracted from the low end?
"Cara said...
The question now is will the low-end drag the high end down with it, will they continue to go in concert with the percentage increases, or will the high end be able to maintain some of those gains based on equity extracted from the low end?"
I agree Cara - the first thing I was looking for was once all 3 hit the same percentage (i.e. each was around say 178-180 of 2000 prices), they would all fall at the same rate. Its only been one month but given the way the Mid and low tiers blew past the high tier (174 & 174 vs 179) that doesnt look so good.
That shouldnt be surprising. If you look at the 1990 bust as a guide, the high end was the most overinflated (94.35 feb 1990), yet it fell the most (down to 85.14 feb 1992). The other two tiers werent as inflated to begin with, and didnt fall as far as the high end did.
Then again, its tough to get much from that 1990 bust, because prices really didnt do anything for years and years afterwards. Overall I think its too early to conclude anything from this yet, but I do think it is interesting to note.
Zerodown - thanks for reposting that link for me.
I just need to point out that these numbers show just how wrong Arky was from the previous thread. There was indeed a small boom in prices in the late 80's and a small decline throughout the mid-90's, but these were very minor. Then, slowly initially in '98 the index breaks above trend and then by 2000 it was off to the races. These gains were not recapturing prior losses, they were well above those levels. Her other statement that there was nothing abnormal about the magnitude of this cycle is also clearly disproven by perusing these figures.
Aw, don't be so harsh on Arkey. We need some people on the other side of the debate to stick around. I mean lance has been gone for a while, and it's been nothing but various flavors of doom, gloom, and 'waiting til I can afford'.
Different perspectives are good.
Didn't mean to be harsh. I hope she keeps contributing. Just better to discuss real numbers than made up assertions.
(sorry, continuation from last thread)
CRT -
"I wish you hadnt said Howard. Of all the counties I look at in MD, it is the one that most baffles me."
Exactly. We've been following the market fairly closely for 2+ years now and I still scratch my head at Howard county prices. I'm not as familiar with Arlington, but from the descriptions here, it sounds like similar pricing behavior, as you mentioned.
We've got a healthy DP saved (20% of target price), but I'm ok waiting until I feel like its done a little more correcting.
I'm hoping the recent closing of a prominent builder will help push things along (Link). The banks involved could end up putting 60 or so fairly expensive lots (1-3 acres) on the market quickly, pushing down other lot prices, etc, etc..
It does bring hope to see new construction popping up in searches under 500k, as well as nicer things that weren't showing up in similar searches two years ago, but I expect more.
I have no numbers or in depth analysis to back it up, but a 20% further decline in some of the stuff I'm looking at is what I'm expecting (or maybe just hoping for).
Another Battle on the Housing Front
Stimulus Aid Set Aside to Help Military Families Avoid Foreclosure:
http://tinyurl.com/bsrzau
This will save our previous landlord. They bought a brand new house for $450K in 2003 in Manassas which will probably assess in the low $300Ks now. He was going to become a geobachelor.
The article mentions military members using no down/interest only loans. My brother (a Marine) and his (accountant) wife did that, to perfect advantage. Housing allowance is tax-free. Interest-only mortgage payments are 100% deductible. So you get a double benefit. They knew they'd only be stationed in NC for two years, and when they moved, they did a for sale by owner and priced aggressively. Sold the first week to someone without an agent. Used the windfall for a downpayment on their custom-built house in Wilmington.
Many savvy Marines did similar things. My husband had one guy under him, a Gunny, who cleared $300K on his place by Quantico. but that was here, in bubbleland. Housing prices haven't changed as dramatically in Jacksonville, NC.
Bottom line: with tax-free BAH and the mortgage interest deduction and knowing you'd move in 2-3 years, it made perfect financial sense to buy with an interest-only loan. Maybe it still does in some places, near bases with constant turnover and steady values.
tabitha
That 2006 cutoff is going to be nasty. It was not common knowledge in 2006 that prices were falling or going to fall. And while some services personnel were savvy, most could not be expected to be paying that close of attention.
cara,
i think several things about that benefit is nasty. what about all the people who already suffered losses, foreclosure? we lost everything and more, almost went bankrupt, when my husband went active duty and we had to sell our house in Indiana in 2004. Had nothing to do with a bubble or a risky loan--Indiana is just a lousy market. How far back does this go? Do you check and make sure they were truthful on their initial loan? This applies to savvy people who guessed wrong as well as gullible people who were taken advtantage of...hmmm. Always tricky.
"Randy said...
I'm not as familiar with Arlington, but from the descriptions here, it sounds like similar pricing behavior, as you mentioned."
It may be Randy. In that regard, you might find this chart helpful.
http://www.recharts.com/mris/mris_13.html
The keys for me are the inventory (red bars) on the 8th & 9th graph. Notice that while they do decline in the winters, on a year over year basis, they are at or near all time peaks. Also, notice how months of inventory (the white line) is very high to begin with, and increasing. I personally would not want to head into that market til I saw how it handled moving that inventory.
For example, if Howard is like Loudoun, you will see a dramatic fall in inventory, along with a pretty dramatic price decline:
http://www.recharts.com/mris/mris_7.html
By contrast, if Howard is more like Arlington, you will see a gradual shedding of inventory, along with much softer price declines:
http://www.recharts.com/mris/mris_15.html
The point is, we just dont know yet. Inventory wise, it looks a lot more like Loudoun, yet performance wise, it has been looking alot more like Arlington.
In any event, give it 6 more months. I think we will know alot more about it by then.
No way should anyone be calling bottom. For those of you who haven't seen it, this graph is telling and shows that historically, precipitous increases are followed by equally steep price drops back to the norm.
http://tinyurl.com/bugz3e
Home prices are showing downturn in almost all major cities and hopefully this trend will improve by the year end as per real estate experts from around the world.
Wachovia Online Banking
Post a Comment