The S&P/Case Shiller® composite index (graph here) for the month of December was released today.
"'As measured by prices, the housing market is definitely in better shape than it was this time last year, as the pace of deterioration has stabilized for now. However, the rate of improvement seen during the summer of 2009 has not been sustained,' says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. 'In the most recent months we are seeing fewer and fewer MSAs reporting monthly gains in prices. Only four cities saw month to month improvements in December over November, when you look at the raw data. We are in a seasonally slow period for home prices, however, so it is not surprising to see better statistics in the seasonally-adjusted data, where 14 of the markets and the two monthly composites all rose in December. Similarly, the National Composite fell by 1.1% in the fourth quarter, but rose by 1.6% on a seasonally-adjusted basis.'"
19 comments:
Paging Robert...paging Robert. According to your V shaped recovery, CS is to hit 188 a mere 3 months from now. Still confident in that?
Actually, I shouldnt talk too much because I am going to have to backtrack off my, bracketed 160-180 L shaped recovery. I expected some slight declines but not this slight.
Even when the govt training wheels are taken off, I simply dont believe we will have the downward "oomph" to hit 160 again. Soo, let me go ahead and admit I was wrong right now, and restate as follows:
Case Shiller will trade somewhere between 170-190 over the next 18 months, before there is any chance for a significant rise thereafter.
So I think it is still an L shaped recovery, but more like a slight "/" shape before we get to the sawtooth part of the L (if that makes any sense at all).
So IMO while the bottom has indeed been hit and is likely permanent, there is still little to no chance that prices rise quick enough that you need to worry about it. Thats my story and I am sticking to it.
Anon,
I forgot what I predicted, but I'm sticking to it!
RE: Fairfax County Assessment
Not all assessments went down for all properties in Fairfax County. Newer, bigger homes saw assessment increases.
In one street in the Town of Vienna (zip 22180) that I checked, older homes (from 1940s-60s) went down in assessment (percentage varies, one by 7%), however new bigger homes (2002-2009) went up by as much as $100k or more to average $1 mllion in assessment value.
So does this mean expensive new homes are going up in price, while older homes are losing value?
I would not be surprised the same happened in other areas particularly where you have a mix of old and newer, in-fill properties.
"dc2 said - So does this mean expensive new homes are going up in price, while older homes are losing value?"
No, it means county needs revenue from somewhere to not worsen already gigantic budget shortfall of 650 million.
Anonymous,
I haven't called you out before - but your 160-180 prediction always came straight out of housing futures. And, now that futures seem to suggest otherwise - you are back-tracking on it.
I stick to mine - we hit 155 some time in next 18 months.
spider,
do you remember what mine was? I think up to 10% down and flat for a number of years. We have seen overcorrection in some markets and I don't expect we will re-visit those lows. Frankly, tax assessments are lagging as was posted by another (on the way up and down).
Heard on the news tonight that FX is raising the tax rate again! I went down 5% last year and ended up paying more. Seems that will continue. What the h@## they did with all those 20% increases is what I would like to know.
Spider-
I doubt we will see 155 in 18 months. I will stand by my prediction that we will stay between 165 and 180. I don't see housing going up so the current levels are basically the peak, but I am pretty convinced we are only going to see 0 to -.5% a month moves. At that rate we just will not get into the 150s anytime soon.
I think I am going to back track on my treasury call. Although treasuries have risen as I predicted I no longer see 4% by the end of the year. I think we will see something closer to 3.6%. I am starting to think rates are going to stay low for a lot longer than I originally expected.
"housbuyer said - I don't see housing going up so the current levels are basically the peak, but I am pretty convinced we are only going to see 0 to -.5% a month moves. At that rate we just will not get into the 150s anytime soon."
HB,
Don't be so convinced, specially when we know MBS purchases end in March and tax credit expire in April. With housing flat to down with all the stimulus, it is very unlikely to stay that way without it...IMHO.
"Spider said...
I haven't called you out before - but your 160-180 prediction always came straight out of housing futures."
Thats right -- I think I said as much -- and if not, let me make it clear, I was basing it pretty much on futures (as they were in allignment with my pre conceived ideas of what should happen.
"Spider said...
And, now that futures seem to suggest otherwise - you are back-tracking on it."
I am. I was wrong.
"I forgot what I predicted, but I'm sticking to it!"
That is certainly consistent with your track record...
"Thats right -- I think I said as much -- and if not, let me make it clear, I was basing it pretty much on futures (as they were in allignment with my pre conceived ideas of what should happen."
Nothing wrong with that... if you are going to bet against the futures you need to have a good reason.
"I'm sticking by what I predicted - a cataclysmic economic collapse is underway and the bottom in housing is far away. "
That isn't what you were saying a couple months ago!
"Comment deleted
This post has been removed by the author." - Contrarian
Spider-
I don't think the end of the MBS program will make that much of a difference. They have removed a ton of the stock of mortgage, which I think is more important than the flow of buying ~10 billion a week. My guess is that the spread between MBS and treasuries goes up 10-20 BPs but I just don't see a 0.1-0.2% change in mortgage rates impacting housing. I also think that most of the people who cared about 8k already used it so I just don't see huge drops.
I agree with you that prices will continue down, but I don't see as much distressed sales right now so as I said I expect a slow trickle down in price vs. the 1-2% drops we saw in 2008.
Spider-
Although I would love for you to be right. Particularly if we can some how have housing flatish in most of the country and down 20% in our area. I think most of the country has enough issues that I don't want to see their housing markets plummet. DCs economy is strong so I think it could handle a drop.
PS I see the chance of DC doing poorly and everyone else doing ok is basically 0.
The futures have indeed moderated. (I love that that site posts both the current futures and the futures a month or so ago). However, I still see 160 as a real possibility by June.
I think alot of buyers and sellers alike equate "recovery" with no more foreclosures on the MLS. And that's not the case. As the REO drip keeps dripping it will continue to have a pyschological effect on buyers. I think the entire $250k and up market will grind down another 10% for normal transactions over the next 2 years.
The prices for REOs and short sales will go up, but the prices for real sales will grind down.
(I think the below $250k market is probably done and in the process of recovering from its overcorrection).
What could prevent this? If the REO trickle continues to slow in this area. Jobs picking up enough that people start moving here for work in significant numbers. Interest rates staying in the 4.8-5.2 range indefinitely. If all these things happen I don't think we'll see 160 again.
wow Cara do you realize how aggressive that prediction is? My guess is that prices are down a little from December but not much. So we are likely still in the high 170s so to get to 160 by June you would need to see prices fall 10% in the next 3-4 months. Due to the fact that CS uses a 3 month rolling average we would really need May's sales to also be around 160ish.
As I said this would help me a lot seeing that I will likely buy in the late fall or early winter, but as I said I just don't see things moving that fast. People are just no longer in the rush to sale yesterday like they were a year ago.
housebuyer,
My writing didn't convey my thoughts clearly this time.
I'm saying it could get to 160 by June, not that it will. I think we could easily reach 160 eventually, because I don't think inflation is going to be helping things in the near future, such that price declines will continue to be nominal as well as real.
People are no longer in a rush to sell, but after April people will no longer be in a rush to buy either. If you can wait it out for REO opportunities to present themselves, then you don't have to pay retail. That's why people moving to the area is critical to the market price stability. Those people generally can't wait, and don't consider renting for a year instead. Or they'll get a short-term expensive rental while shopping, which will spur them to act quickly because of the premium paid for flexible leases.
Basically I see psychological scars coming about if REOs continue to be part of the picture. Either certain neighborhoods will get unfairly maligned for having had more foolish buyers in the past, or the whole buyer mentality will evolve due to the constant examples of there but for the grace of g-d go I. I think there's a big difference between a 2 year "price correction" period with a concentration of REOs in it, and a 5 year drag out of continued distress.
Basically, I see tbw's inter-county price differentials spreading further, not lessening. Because the areas with fewer scars will be able to appreciate sooner.
They talk about how they have fully restored this house. Oakton house
Am I crazy when I go through the pictures the only thing that looks like it might be new is perhaps the kitchen. I also am not sure if this is even new. I don't know this area well enough to know the price is good, but it seems like a huge profit for possibly doing nothing to the house. Either the person got a great deal or area asking for too much. I am leaning towards the second.
Cara-
That makes more sense. I can imagine a situation similar to that other than as I said I expect 165 to be the bottom not 160, but realistically 5 points isn't much so who knows.
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