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Tuesday, August 31, 2010
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19 comments:
Cara-
I agree that there is no reason to go crazy and the best idea is ignore the rumor mill until the rumors sound very likely. I also don't think that another buyers bribe would really help the market much. Anyone who can be enticed to buy a house because of 8K had a year to do it. Sure marginally a couple people might be enticed, but most likely it wouldn't be very many.
Although I do think housing prices and sales will continue to fall so my guess is that they will do something.
It shouldn't be a big surprise, but CS went up big again this month from 182.63 to 185.77 (+1.7%). This was the June release so it was looking at April-June the peak of the home buyers credit. I think next month will probably show a little growth ~0.5-1% as we roll off the super positive months. Starting with the August report I expect to see negative reports for at least 6 months and likely longer.
cara
i doubt there is time left to run another housing credit in this congress.
maybe bernanke can do something but congress is still trying to do approps
hb,
It shouldn't but it still amazes me.
Here's the Not Seasonally Adjusted Tiered indices for DC for the past year:
year month low middle high aggregate
2009 6 163.16 170.99 173.25 173.21
2009 7 164.16 173.76 176.19 176.45
2009 8 169.81 176.97 178.35 179.57
2009 9 170.12 178.07 179.79 180.72
2009 10 173.41 178.75 178.14 180.09
2009 11 174.11 178.02 177.73 179.19
2009 12 173.79 177.63 177.25 178.81
2010 1 173.08 176.02 176.15 177.41
2010 2 170.95 174.88 176 176.59
2010 3 171.68 174.68 173.88 175.44
2010 4 175.83 180.25 176.59 179.56
2010 5 181.02 183.04 178.58 182.63
2010 6 182.72 185.07 182.68 185.77
current breakpoints
(Under $288580) ($288580 - $446033) (Over $446033)
The middle and high have shown the most movement from May to June. Change in mix if most of the tax-credit folks managed to close in May or earlier?
Cara-
I would have thought that a lot of the tax credit buyers closed in June. I also saw the tiered index and was surprised about the high priced homes increase. I was trying to decide if I thought this was related to loosening standards on Jumbo loans/better rates or if this was also noise related to the credit.
I think my conclusion is that it was still related to the credit, but if prices are still increasing in the report 2 months from now I will have to readjust my views.
I do agree that I think a lot of the increase in CS is related to mix. People that really need 8k when they are buying a home also probably need it to be move in ready.
A seasonal adjustment (of course) makes the most recent MoM movements less extreme:
2009 5 161.54 167 171.54 169.98
2009 6 163.05 169.9 171.82 172.35
2009 7 162.74 171.5 173.64 174.61
2009 8 167.55 173.56 174.95 176.76
2009 9 168.24 174.83 176.8 178.28
2009 10 170.97 176.81 176.49 178.18
2009 11 172.61 177.7 177.34 178.29
2009 12 174.18 178.51 177.85 179.26
2010 1 174.88 177.96 178.28 179.05
2010 2 173.92 178.41 179.06 179.48
2010 3 174.61 178.64 177.74 178.77
2010 4 177.08 182.37 179.01 181.71
2010 5 181.66 183.35 179.25 183.22
2010 6 182.7 183.9 181.2 184.85
cara or hb,
How is it that our aggregate number is higher than all three of our low, mid, and high numbers?
Jeremy,
Heck if I know.
I was just wondering another minutia point that will be relevant next month. So, the CS index is a 3 month rolling average. But, of what? How is each month weighted? Equally? By number of days? or by number of sales? I.e. do those months with more sales have a greater impact on the index? Any of these methods is valid, and normally wouldn't be a big deal, but with the tax-credit spike and drop-offs recently and upcoming, I think it's a decent question to ask... If I could figure out who to ask...
Another thing worth noting -- the second derivative went negative this month. We were running at approx +7.5% gains YOY, and now we are running at +7.2% gains YOY.
Clearly, you cant increase your rate of YOY gains forever, but this is the first change in direction in this derivative we have seen in over a year.
Cara-
I am pretty sure each month is weighted equally. They talk about using a 3 month rolling average. If they counted points (months) differently I would think they would need to specify this.
Jeremy-
My guess is that it has something to do with the cut offs changing over time. I can't exactly figure out how it would work. (It reminds me of a Ford report I read in 2007 that said they were gaining share in every car segment but had lost total market share. Although it sounds impossible they were correct). Maybe we are just missing the trick which explains how it can work
hb,
If the market as a whole moved to SUV's, and Ford's gain in market share there were far less than competitors...
year 1:
cars Ford 20% share, cars are 90% of the market
SUV's Ford 10% share, SUVs are 10% of the market
year 2:
cars Ford 25% share, cars are 10% of the market
SUVs Ford 15% share, SUVS are 90% of the market
year 1:
.2*.9 + .1*.1 = 19% of the total market
year 2:
.25*.1 + .15*.9 = 16% of the total market
Extreme, yes, but possible.
Thanks Jeremy,
The relevant part to my question is on page 27. It seems as if each sales pair that exists in the total 3 month interval is counted thrice... Thus it wouldn't be the case that the index is calculated separately for each month and then averaged together, but rather sales-pairs would appear and dissappear from the index as time passes, such that my suspected weighting of the influence of each month is right.
But I could be parsing the math wrong... I'd have to think about it a lot more to be sure.
(the "o" on my keyboard is buggy, if I skipped any...)
Cara-
It was extreme, but it did happen. They had a really high market share in trucks/SUVs and as gas prices rose their share shrank dramatically.
I have tried to think if their is a similar way that something like this could be happening with the CS number. I think it could happen as the cut offs for each segment change. Its possible that this could happen. If the changing of the tiers somehow puts houses that fell a lot in buckets that have relatively few sales they would get over counted in the bucket compared to the total index. So if randomly this continued to happen over time each bucket could slowly trend lower than the total index. Its a bit of a strange solution, but I think it could work.
hb,
I meant my example was extreme. I just wanted to pick something where I knew the numbers would work.
There must be a way to make it work through the changing cutoffs, but I'm too lazy to come up with it.
Cara Said
"I was just wondering another minutia point that will be relevant next month. So, the CS index is a 3 month rolling average. But, of what? How is each month weighted? Equally? By number of days? or by number of sales? I.e. do those months with more sales have a greater impact on the index? Any of these methods is valid, and normally wouldn't be a big deal, but with the tax-credit spike and drop-offs recently and upcoming, I think it's a decent question to ask... If I could figure out who to ask..."
Ask Google! I always do. And it came up with this downloadable document. I haven't had time to go through it.
http://www.docstoc.com/docs/14707567/Case-Shiller-Housing-Index-calculation-methodology
http://franklymls.com/FX7211150
So for the Immunington and immunandria crowd the flippers here sold for their buy price after fixing the place up.
http://franklymls.com/FX7244066
The Brothel is back on the market.
of course te comments say price reduced and they raised it 10K
Pat-
I think they bought it for about half of what they sold it for. If you check the sales the flippers bought it for 147K in 2009. Although the flipped house is only 15% below what someone paid in 2003, so it is likely still well below peak prices.
Drschmid, Have you seen this house?
Here's an example of a flipper who will likely just break even on this house in Woodlea, off Rte 15 south of Leesburg, as the list price has just recently come down to 527k:
http://franklymls.com/LO7326067
The flipper, who purchased the property back in April, paid 519k for it. Looks like he does most of his work in Culpepper and similar further out places.
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