The S&P/Case Shiller® composite index for the month of August was released today.
"A disappointing report. Home prices broadly declined in August. Seventeen of the 20 cities and both Composites saw a weakening in year-over-year figures, as compared to July, indicating that the housing market continues to bounce along the recent lows,” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “Over the last four months both the 10- and 20-City Composites show slowing growth, after sustaining consistent gains since their April 2009 troughs.
“The month-over-month growth rates tell the same story. Fifteen of the 20 MSAs and the two Composites saw a decline in the month of August as compared to July levels. The 10- and 20-City Composites fell 0.1% and 0.2%, respectively. Indeed, the housing market appears to have stabilized at new lows. At this time, it does not seem that any of the markets are hanging on to the temporary momentum caused by the homebuyers’ tax credits."
14 comments:
The one thing you can clearly see in this chart (Harriet, thank you for continuing to make this BTW) is the erosion of the 2nd derivative. A few months ago, we were over 7% YOY. Now we are down to +4.85% YOY.
IMO, watch this one carefully as it was what a few of us were using to determine things were bottoming back in spring 09 (despite the fact that the derivative was still profoundly negative at the time). We are seeing the same thing now, just in reverse.
The most obvious implication is that it is the waning effects of the tax credit. While I do not think that we will ever revisit March 09 levels ever again, I feel 99% sure that we will not break 190 in 2010, and id say there is a 50% chance we will not break 190 in 2011 either.
The Anon,
Good points. I don't understand why some observers believe the numbers suggest a bottom. The #s are for August, the tail end of the hot season, and yet you see a decline in the pace of increase YOY.
Ace - you dont see their case for a "bottom" (i.e. we go below the 165 mark set in 3/09) or you dont see their case for a double dip (i.e. prices go YOY negative)?
In my mind, I can very much see a case for a double dip. However a case for "we havent hit bottom yet" is harder to see.
if the prices are flatlining that may drive capitulation.
For the people who are underwater
and see no easy escape, they may well
walk away.
In stock you are usuaally holding 100% equity, so price changes still leave you with an equity position.
In real estate people are holding very little equity.
When the prices collapse it becomes the banks house.
has anyone compared the difference between franklymls and google maps real estate on foreclosuers/
i see a lot more foreclosures under google then i do in the MLS.
Is that shadow inventory?
Blogger pat said...i see a lot more foreclosures under google then i do in the MLS. Is that shadow inventory?
You bet your sweet patootie it is. Google has much much more powerful databases to pull aggregate data and display it with their map database.
You don't see RE agents threatening to sue Google as one example...
part of the reason i haven't been screaming to buy a place is i figure the shadow inventory will depress prices.
"i figure the shadow inventory will depress prices."
People have been saying that on this blog for -- well forever. I remember well when the inventory first started declining around mid 2006:
http://www.recharts.com/nova/nova.html
The response at the time was an emphatic "just wait, inventory is NOT really declining - there is a huge shadow inventory building up, and when it 'hits' it will drive listings to the moon, and prices to the stoneage - just you wait"
Of course, no one stopped to consider that the shadow inventory was not an "event" that would not be unleashed at any one time. They never stopped to consider that the shadow inventory has been beeing unleashed each and every day, drip by drip, since 2008, and has been depressing prices, every day since 2008, and will continue to depress prices til its all gone another 2-5 years from now.
Whether all that "depressing of prices" will actually drive prices lower is another matter however.
Anon
you are right shadow inventory is dripping out.
Now do we have a slow painful chinese water torture, do we have a johnstown flood or do we have a sponge holding water slowly soaking into the
system?
Part of this is predicting human behaviour. Will people stampede for the exits, like a bank run or stock slide? Will people just walk through the cold driving rain?
Japanese land owners have been marching through the rainstorm for 19 years now. Disciplined people those Japanese.
China is driving a real estate bubble up.
Here we have seen sort of waves of behaviour. The Subprime people went to hell and fled, and took down Lehman, Bear and Countrywide.
Now what happens with Prime? Especially in DC? Sure Feds will just deal with the misery.
But people who work at associations like the ATA or AAAS? Will they treat their homes as just bad investments?
What happens, is hard to say. I can say for sure I see banks sitting on SFH's in South Arlington.
i wish there was no shadow inventory, I could make rational decisions, instead I have to make decisions based upon what the FED will do.
Anon, Interest rates are incredibly low and we see negative interest rates on T Bills.
What's up with that?
"Will people stampede for the exits, like a bank run or stock slide? Will people just walk through the cold driving rain?"
I think the last 18 months is a pretty good indication of what will happen. As its been since early 2009 houses keep drip drip dripping onto the market and we go through this "cold driving rain" of slowly rising prices.
The horror.
The horror.
anon
we have had interest rates driven into the dirt and a $8K buyers bribe.
plus the Feds picked up a trillion dollars in garbage MBS.
if these push back?
we are now in a 23 state foreclosure moratorium.
so supply is tightening up.
what happens when the moratoria stops.
pat-
I think the problem is a lot of those things are not going away. Interest rates may go up, but they are going to stay very low for years to come.
Also the MBS the fed bought were all government guaranteed (Fannie/Freddie) so I wouldn't really call them garbage MBS. Sure Fannie/Freddie are losing money, but they were going to lose that money whether the fed or a private investor bought the securities. I guess they also helped companies buy some private label MBS through PPIP, but this is a very small program and didn't really do much.
"what happens when the moratoria stops"
Probably the same thing as when the last foreclosure moratoria stopped in May 09. If you dont recall, just look at this chart -- a "cold driving rain" of slowly inflating prices...
The Horror...
The Horror...
Reposting this here, so I can find it later...and laugh at it when history proves it terribly terribly wrong.
(i.e. index value -- MOM change -- YOY change). Feel free to critique
2010...............MOM..........YOY
Sep 187.5.........-0.4%.......+3.8%
Oct 186.0.........-0.8%.......+3.3%
Nov 184.0.........-1.1%.......+2.7%
Dec 181.0.........-1.6%.......+1.2%
2011
Jan 177.0.........-2.2%.......-0.2%
Feb 173.5.........-1.9%.......-1.7%
Mar 171.5.........-1.2%.......-2.2%
Apr 170.5.........-0.6%.......-5.0%
May 171.0.........+0.3%.......-6.3%
Jun 172.0.........+0.5%.......-7.4%
Jul 173.5.........+0.9%.......-7.6%
Aug 175.0.........+0.9%.......-7.0%
Sep 176.0.........+0.5%.......-6.1%
Oct 175.5.........-0.3%.......-5.6%
Nov 174.5.........-0.6%.......-5.2%
Dec 173.0.........-0.9%.......-4.4%
2011
Jan 172.0.........-0.6%.......-2.8%
Feb 171.5.........-0.3%.......-1.2%
Mar 171.0.........-0.2%.......-0.3%
Apr 172.0.........+0.6%.......+0.9%
May 173.0.........+0.6%.......+0.9%
Jun 174.5.........+0.9%.......+1.4%
Jul 176.5.........+1.1%.......+1.7%
Aug 178.0.........+0.8%.......+1.7%
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