The S&P/Case Shiller® composite index (graph here) for the month of January was released today.
"'Home prices, which peaked in mid-2006, continued their decline in 2009,' says David M. Blitzer, Chairman of the Index committee at Standard & Poor’s. 'There are very few bright spots 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 nine of the MSA’s falling more than 20% in the last year. Indeed, the two composites are very close to that rate and have been reporting consecutive annual record declines since October 2007. The monthly data follows a similar trend, with the 10-City and 20-City Composite showing thirty consecutive months of negative returns.'"
18 comments:
Thanks, Harriet. C-S: Hey, guys, why can't you see the "bright spot" that prices are returning to saner levels, (potentially) enabling a lot of people to buy who weren't able to do so during the bubble?
Sorry, it's a pet peeve of mine.
ace,
quite. At least some major media outlets have taken to occasionally refering to it as the housing "correction" rather than "crisis".
The rate of YoY declines has inched down for the first time since the Oct 2006. One month blip? or the return of seasonality? Guess I should look at the plot eh?
"Cara said...The rate of YoY declines has inched down for the first time since the Oct 2006. One month blip? or the return of seasonality?"
Even stranger that improving rate of burndown is coming almost completely from the high end. Heres the rate of decline Nov-Dec-Jan for the last 2 years.
High end (late 07 - early 08)
Nov -2.0
Dec -2.0
Jan -1.8
High end (late 08 - early 09)
Nov -2.0
Dec -0.7
Jan -1.1
Much improved on a year over year basis. How about mid end?
Mid range (late 07 - early 08)
Nov -2.5
Dec -2.3
Jan -2.6
Mid range (late 08 - early 09)
Nov -1.9
Dec -3.4
Jan -2.1
Bit of a mixed bag here. Low end?
Low end (late 07 - early 08)
Nov -1.5
Dec -2.8
Jan -2.5
Low end (late 08 - early 09)
Nov -4.2
Dec -5.3
Jan -6.1
Yikes! Seriously???
crt,
qualitatively this is similar to what CR is plotting for San Francisco. Anyone care to make such a plot for DC? Novawatcher?
Until it's really the bottom for the bottom, I guess momentum matters.
Ace,
I've always been grateful that the awful housing bubble finally burst. I accept, however, that there are inevitable economic problems caused by this debacle, and that we all have to be vigilant and aware of what further effects will mean for our household finances.
I visualize the housing bubble as the true "disaster" and the return to sanity as the "fallout". After which we pick up the pieces and move on.
My pet peeve is when agents like the one I linked to the other day (Julie Emery) harp on the necessity of "stabilizing housing prices" through any wacky governmental method necessary.
Cara - I just checked CR's post and (gasp) I actually think hes wrong on one thing:
"I expect the lower priced areas to bottom (especially in real terms) before the higher priced areas."
It may not work that way. In the 1990s bust high end LA rose the most, fell the furthest and bottomed last. Same thing here in DC (I think) back then. High & low were both at a value of 93-94 in 1990. Low bottomed very quickly at a value of 90.89 in 1991, while high end continued to dropped to a value of 84.68 in 1992 - and 84.57 in 1996!!!
After that, from 1996 to about 2001, high end outperformed low & Mid. Then after 2001, high end did not grow the way low end did til 2006.
I guess what I am saying is that if the past is any guide, its almost as if each tier does what it wants to do separate from the others. However if there is any correlation, the high flier of the tiers will overcorrect in relation to the rest during the bust.
Translation, for your price tier, your setting pretty. You'll see the biggest crash (overshoot), and probably outperform the other tiers over the next few years.
CRT,
Does anyone know if theses "tiers" are set by quintiles or what? My gut says the lowest tier is most intrinsically tied to incomes and "affordability products" and other factors that change the allowable factor of income to mortgage amount. The mid-tier has some of that, because first-timers and short-term movers do buy in it, but is also buffered by move-up equity, creating a time-lag whereby the recent price ramp up of the low end effects the ability to bid up the mid range. The top tier really is it's own beast and is tied to the wealth and income of the truly wealthy. Which is effected by the marginal tax rates, the tax laws and the economic market conditions.
So, to an extent the top tier is completely disconnected from the bottom tier other than the ways in which both effect and are effected by the state of finance and the economy.
No idea on how the tiers are set Cara. Its just one of the mysteries of CS.
Incidentally, im rethinking my doubt about high end really stabilizing first. I am falling into the same trap I chastize others about - namely "high end" does not mean "close in".
When the "high end" burndown started, we noted it had much more to do with the firesale of McMansions in Loudoun PWC, Ffx, etc, than it did with the much smaller declines in bungalows & rowhomes in Arl Alex & DC.
Now as we get closer to stabilization, the reverse is just as likely true. If high end does show improvement, is more a measure of whats going on in the western burbs than elsewhere. Just something to keep in mind...
CRT, this is a little beside the point, but I just can't help myself...
The typical, modest middle America house - good condition, updated, 3 or 4 BRs, 2.5+ baths, nice moderate-sized yard with a patio, in a low crime neighborhood with reasonably good schools, and with a 20 minute or shorter commute to work - costs more than $1 million in many neighborhoods around here. A comparable house would cost less than $300K in most American cities - in many cases far less than that. Similar comparisons can be made for housing in other ranges. But the salaries aren't anywhere close to an equal multiple. And the gap grew much wider over the past 8 or so years.
When there are federal-level discussions of "wealthy" (when they often mean "high income"--not the same thing at all) and "high end", it seems they are all thinking of the cost of living in the Simpsons' Springfield.
Harriet, well-said and I agree - obviously there are many people who have been greatly harmed by what has happened through no fault of their own (and some who bear some responsibility as well). I was reacting to the C-S characterization that there are "very few bright spots" rather than a more balanced interpretation of pros and cons, and implying that "bright spots" means price stabilization or increases.
I call this as price "correction" which needs to happen further, and my agent call this as a already a great opportunity to buy :)
I look at 97-98 prices as baseline and then apply a rate just above inflation to calculate a "correct" price. And he shows me how much discount I am already getting as compared to 2006.
Just two different perspectives!
Vinny or others:
If one wanted to "look at 97-98 prices as baseline and then apply a rate just above inflation to calculate a 'correct' price"
what numbers would you use for inflation each year? It seems like it is measured differently depending on which website you look at.
CRT, JF, Ace and others,
I hired a lawyer and have a signed contract now.
I have been looking at listings almost daily for the past 3 years, but guess how it ended? An unlisted property.
Congratulations Ted K. Im glad to hear it! A word of advice...When you get your lender lined up, ask them who they are going with to conduct the settlement (its your right as the buyer, but if you dont care, I often just go with lenders usual closing firm).
Anyway, be sure to get in touch with them early since they may want info from you, and since there isnt a realtor there to facilitate this, these things sometimes fall through the cracks.
Again congrats!
TedK, congratulations! I hope the improvements and the closing proceed smoothly.
Cara, have you looked at properties like these instead of TH's in Burke?
http://franklymls.com/PW6599030
http://franklymls.com/MP7015452
Jeff,
Those are pretty. Sort of like big detached townhomes, but nice. I know my money would go ridiculously further in Manassas or Manassas Park, but I'm not willing to do the longer commute. Burke is as far as I'm willing to go. They are helpful to keep in mind when getting perspective on what things are worth and where SFHs in Burke should be headed by the end of this mess, but I'm not going to make that trade.
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