The S&P/Case Shiller® composite index (graph here) for the month of July was released today.
“'The rate of annual decline in home price values continues to decelerate and we now seem to be witnessing some sustained monthly increases across many of the markets' says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. 'The two composites and all metro areas are showing an improvement in the annual rates of return, as seen through a moderation in their annual declines. Looking at the monthly data, the 10-City and 20-City Composites and 18 of the 20 metros areas increased in July. In addition, both Composites and 13 of the MSA have had at least three consecutive months of positive prints. These figures continue to support an indication of stabilization in national real estate values, but we do need to be cautious in coming months to assess whether the housing market will weather the expiration of the Federal First-Time Buyer’s Tax Credit in November, anticipated higher unemployment rates and a possible increase in foreclosures.'”
21 comments:
Had that 8000 dollar buyer's bribe not happened, demand would have been weak, and those numbers would be down, down, down. Hope you bubble sellers enjoy the gift from taxpayers. Hope you buyers can justify paying an extra 30 grand for an 8 grand bonus. Idiots.
You sound like a bitter wallet-clinger. :-)
Kevin-
I agree with you that without the bribe the economy/housing market would have likely continued down. So although this is true I don't think it will necessarily fall 30K when the credit goes away. So I wouldn't call people idiots for buying now.
Thanks for posting these as always Harriet.
a 9.78% YoY decline from last July, which was a 15% decline from the year before. Wow. makes the seasonal machinations look pretty insignificant to me.
It's vaguely comforting that C-S says I'm better off for waiting another year and flushing out my downpayment fund rather than buying last year, even if my own observations look more like Kevin's.
I'm a bitter taxper slash would-be buyer. I don't like seeing futile gimmicks like this that just temporary distort the market.
Housebuyer, if since the credit was implemented, all houses I've been looking at have gone up that much, what on Earth makes you think they won't fall by at LEAST that much when it disappears? You have all those future buyers displaced into the past. What exactly will happen to the market then? It will drop like a rock. Probably worse than before, which isn't necessarily a bad thing=)
kevin, housebuyer,
If I may answer, while the $8k pulled future buyer forward it also cleared a lot of REO inventory, and created a lot of comparable sales. In this area there were a lot of fence-sitters who have been waiting since 2007 and earlier to buy. Those, combined with the normal level of demand could be enough to maintain prices if interest rates are kept low for a few years while the rest of the nation recovers. Moreover, if this temporary respite has been enough to get the panic out of the business sector, and work most of the bad assets off the bank balance sheets or give them time to absorb the losses, then local economic recovery is possible which could prevent further declines by maintaining demand and preventing some of the walk-aways.
Same principal as Keynesian stimulus at the zero-lower bound as a whole. Create the time and oportunity for the economy to heal itself.
Cara-
Thanks for answering the question for me. I would also add that now that the economy is not in a total tail spin there are less people who feel like they must sell now or watch their house fall in value. A lot of buyers have been holding off for several years as they watched housing continue to fall. If it flattens out for a year or two they may be more willing to buy. Finally housing historically goes up ~3-4% a year so if they are able to put band-aids on the problem which keeps it flat for a couple of years these 3-4% moves will bring it down to the correct value.
Seems kinda hard to ignore that all assets prices - stocks, commodities, real estate - are all inflating together - worldwide.
Kevin - To be sure, the buyer bribe has some effect, but its not a clear case of pusing things up that otherwise would go down.
The bigger issue is fundamentals and how they weigh on local economies. In places like Las Vegas where fundamentals are extremely weak, its no surprise that even with the 8K buyer bribe, prices (which are already at year 2000 levels) went down each and every month this summer. Thanks to the bribe, the rate of decline might have slowed, but again they had zero bounce this year.
Likewise in the DC area the fundamentals are pretty strong. Thus, the bribe certainly helps, but likely only excacerbates a positive price trend that is due primarily to sub 2005 level inventory, lowest unemployment in the nation, and the highest income growth in the last decade.
I realize you are frustrated, but its not at all clear that if the bribe didnt happen, prices would fall by 30K in this area. Just like you were in thinking the end of the foreclosure moratorium would cause an avalanche of homes on the Northern Virginia market, I think you are putting far far more importance on this 8K buyer bribe than necessary.
Come on. Before bribe, prices trended downward. As soon as the bribe occurred, our region bounced. That some like Vegas did not is certainly a testament to how bad they are, but there is nothing to indicate that we would have seen one month of upward trending data had the credit never happened.
I am angry as a taxpayer, and I think it is futile. What could possibly be the long term outcome of this credit? Anything positive?
@Robert
Inflating seems to be the correct word.
Robert,
Didn't oil just slip back down to $66/barrel?
Isn't milk falling through the floor to bankrupting all diary farmers?
Tbw,
Nice chart, and good point. I think this whole seasonal rally is more about interest rates than the $8k. Sadly I also think they'll maintain these interest rates or near them for another year or so...
TBW, good point, and that obviously has a lot to do with it. But it's the manipulation of the people that angers me. Look at when the bribe became available and when those numbers ticked upward. That is an undeniable correlation. If you have to pay somebody 8k to buy something, that's a shitty purchase they're making and shouldn't be making.
Taking future buyers and putting them in the present/past does absolutely nothing for the market or the economy in the long run. It's a waste of taxpayer money and it will trap more buyers underwater. It is indefensible.
Kevin,
I think DC buyers would probably have bought anyway, but perhaps to a lesser degree.
This has become a job center of last resort.
Here's some sobering stuff: Fannie Mae Serious Delinquency Rates from CR today.
The "bitter wallet-clinger" comment I should have clarified - it was meant to be a jab at your audacity as a taxpayer to wonder about this.
"Kevin said...Come on. Before bribe, prices trended downward. As soon as the bribe occurred, our region bounced."
Kevin - that is not universally true. Lets compare our 2 weakest counties, PWC and PG. As we know, PWC is far ahead of PG in the correction cycle. Did the bribe affect both areas?
Heres PWC. 2nd chart down clearly shows the bounce:
http://www.recharts.com/mris/mris_9.html
By contrast here is PG county (see 2nd chart)
http://www.recharts.com/mris/mris_6.html
Wheres the bounce caused by the buyers bribe?
CRT, as I mentioned regarding Vegas, some regions obviously could not be saved by this bribe. So I was not making a universally absolute statement, just pointing out the aggregate market response.
Latest Washington DC Metro Case Shiller Home Price Index from January-1987 to July-2009 issued on 9/30/09
I'm a bitter taxper slash would-be buyer. I don't like seeing futile gimmicks like this that just temporary distort the market.
Welcome to post-Renaissance civilization? You must be new here.
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