The S&P/Case Shiller® composite index for the month of March was released today.
"'This month’s report is marked by the confirmation of a double-dip in home prices across much of the nation. The National Index, the 20-City Composite and 12 MSAs all hit new lows with data reported through March 2011. The National Index fell 4.2% over the first quarter alone, and is down 5.1% compared to its year-ago level. Home prices continue on their downward spiral with no relief in sight.' says David M. Blitzer, Chairman of the Index Committee at S&P Indices. 'Since December 2010, we have found an increasing number of markets posting new lows. In March 2011, 12 cities - Atlanta, Charlotte, Chicago, Cleveland, Detroit, Las Vegas, Miami, Minneapolis, New York, Phoenix, Portland (OR) and Tampa - fell to their lowest levels as measured by the current housing cycle. Washington D.C. was the only MSA displaying positive trends with an annual growth rate of +4.3% and a 1.1% increase from its February level.'
'The rebound in prices seen in 2009 and 2010 was largely due to the first-time home buyers tax credit. Excluding the results of that policy, there has been no recovery or even stabilization in home prices during or after the recent recession. Further, while last year saw signs of an economic recovery, the most recent data do not point to renewed gains.'"
29 comments:
Yet another kick in the nuts for the "March 2009 was nowhere near the bottom" housing bears.
Kev, you want to throw in the towel for your "CS will be at 150 by June" prediction?
The Anonymous:
The 20-city composite index was at 138.16, falling below the 2009 low of 139.26. The DC market, on the other hand, out-performed every other market.
But, if the index continues to fall, and absolutely NOTHING suggests it won't, do you really think DC will be spared?
Can someone please explain to me why DC area is outperforming other markets? What is so special about this market?
Two words: FEDERAL GOVERNMENT
I'm thinking that the DC Metro housing market will follow the rest of the country along the spiral once the federal budget situation is worked out and overall government spending is drastically reduced. This will be particularly true within the defense contractor world, which is one of the area's biggest industries.
melkam-
I agree with Jaime in terms of our region is different because the federal government never cut back when the private industry did. This is why unemployment around here is very low compared to the rest of the country.
If Jamie is correct and the federal government significantly reduces jobs this area will get hit hard, but if they do not cut back this area will likely continue to outperform.
But do you think the federal government will really decrease budgets and salaries or only appear to decrease them through rhetoric and numbers manipulation??
Anonymous, I have conceded that that mark was probably too low. So how many more times are you going to keep asking?
Not that you would care, but the revised CS numbers have shown continuous price declines in DC since last summer. Every month that you do your selective analysis and celebration, you are ignoring that they're showing a decline for the past month. And yet your arrogance remains unwithered.
Only 15% of the federal government employees live around here. Granted there are a lot of contractors also. Are there numbers/facts that explain how the federal government is the factor for the housing market to outperform consistently?
Minneapols has similar unemployment rate and it was down 10% over the past year.
I heard on WTOP yesterday that contractors' pay increases factored into the contracts they are on are starting to be frozen. That doesn't mean that all contractors on those contracts will have their salaries frozen as well (rather, their companies can eat those lost gains), but it's showing that the federal pay freezes are bleeding into the contracting world, or that similar measures are being taken on that end.
I can't find the link on WTOP, but this appears to touch on it:
Contractor salaries chilled by federal pay freeze
Federal agencies, in light of crippling budget cuts and a two-year pay freeze for their own employees, are exercising increasing control, both directly ...
Kevin, I'm glad to see that. It's been happening everywhere else for a long time (with a few exceptions, I'm sure), so I don't see why the contractors should be exempt.
"Mike said...But, if the index continues to fall, and absolutely NOTHING suggests it won't, do you really think DC will be spared?"
"Spared" meaning what? Spared in the sense that prices will continue to rise in perpetuity? No. Flatlining looks likely for a few years to me.
However,
"Spared" in the sense that March 2009 @ 165 is, was and will continue to be the bottom, much to the dismay of the bears who at the time said we were "NOWHERE near the bottom?".
Yes, in that sense we will indeed be spared.
"contrarian said...
Mike,
You are talking common sense while at the same time you are talking to Anonymous. Sorry, but you simply cannot reconcile those two issues. :-)"
Hey speaking of common sense, lets see what you wrote nearly one year ago:
"contrarian said...
Three years from now, house prices will be at least 50% below today's prices. 6/13/10 2:29 AM"
Well here we are one year later and prices are up another 5% from your "at least 50% below" mark.
Youve got two years left on that assinine prediction. What does your common sense tell you the likelyhood is that this one will come true?
Ace, even though I'm a contractor, I concur. I have no problem with this. But aside from that, I think our uber-bulls need to think twice about the notion that DC is immune, or special. If incomes here grew at an amount greater than the rest of the nation over the past decade, it wouldn't surprise me if there is a reversion to the mean over the following decade. I certainly don't take my compensation for granted.
kevin said...
Anonymous, I have conceded that that mark was probably too low. So how many more times are you going to keep asking?
Sorry, I didnt get that sense from your post last month. Most of what I got was alot of flailing about and excuses for why this part was right, or that part may still happen, etc.
What I expected was like when I told Spider:
"I did. I was wrong."
Or when Robert told me:
"I missed the mark. No excuses."
Its that sort of sentiment I was looking for. Otherwise, it looked like you were trying to pull a contrarian where one is never truly "wrong" as such.
So that said, what does it feel like to know that you missed the bottom so badly. Do you feel any sense of remorse for chastizing others on this site who disagreed with you when it turns out they were in fact right and you were wrong?
Kev, isn't there a 'natural' seasonal bump in the Spring?
NOVA prices are at the whim of the federal budget.
Wasn't the pay freeze only on COLA's? Everybody continued to get their annual step increases, correct?
"contrarian said...
Anon,
You publish b.s.
5/31/11 4:49 PM"
Awww, wadda matter? Your fountain of doom running low?
Sorry to say, this is so typical of you. One year, you make a cocksure, arrogant statement like "Three years from now, house prices will be at least 50% below today's prices", and then when called on it, all you can say is "I didnt say that"
You know, there is part of me that thinks, and excuse my french here, but you are a lying sack of shit. However, perhaps I just misunderstood you. Thus, for the record, did you say:
"contrarian said...
Three years from now, house prices will be at least 50% below today's prices. 6/13/10 2:29 AM"
http://novabubblefallout.blogspot.com/2010/06/northern-virginia-weekend-bits-bucket_12.html
Yes or no???
Anonymous:
Sorry, I didnt get that sense from your post last month.
Don't apologize, you did get that sense. You went from demanding a concession to then rejoicing while mocking me for changing my position. You've proven to me and pretty much everybody here that whether somebody stands by their position, revises their estimates, or completely changes their mind, you are going to mock them. As I've said, you're a world-class cock.
Its that sort of sentiment I was looking for. Otherwise, it looked like you were trying to pull a contrarian where one is never truly "wrong" as such.
Home prices have been falling every month since the tax credit ended. If you want me to concede I was wrong before it's actually PROVEN that they are wrong, while they're still falling, then go EABOD. You're incapable of showing the slightest bit of modesty or humility after the fact, and wouldn't even dare to tell someone they were right or you were wrong before time has played out to know for sure.
I've already said that I have my doubts that it will reach the 155 mark. If that's not good enough for you, then tough shit.
Robert:
Kev, isn't there a 'natural' seasonal bump in the Spring?
There should be, yes. These markets have been manipulated up and down for a while now. I think there's a chance that March 2009 was a natural increase in prices, but that it would have been the only month of it occurring had there been no tax credit. Like the rest of the country, the increases were sustained until the credit was either removed, or under the threat of removal. Absent of govt gimmicks, the market is still playing itself out. Two years of b.s. games played by govt social engineers, and we've resumed our housing market crash. This region and the nation could be within 1% of the bottom. Or maybe it's 20%.
"Kevin said...Don't apologize, you did get that sense. You went from demanding a concession to then rejoicing while mocking me for changing my position."
I swear to you on the health and wellbeing of my precious little niece, I did not "get that sense". I also did not "mock you for changing your position", but if you think I did, I apologize.
Changing one's position is essential as the facts around us change. Note, I do and will chastize someone for being incredibly late to change their position, especially in light of facts that were evident to the rest of us months ahead of time. Still thats better than Never changing one's position (a la contrarian).
In all seriousness, go back and re-read what I wrote if necessary. I was by all means, giving you "the business" but only for what I deemed to be stupid calls (i.e. mark me down for 150 by June).
"contrarian said...
Anon,
Housing prices and the entire banking system are being artificially propped up by the government."
So Noted...
"Freddie and Fannie are insolvent."
So Noted...
"The FDIC is insolvent."
So Noted...
"Social Security and Medicare are insolvent."
Again, so noted Contrarian. The question, however, was perhaps I did not understand what you meant when you said I "publish, b.s.". So again, before I come outright and accuse you of being a lying sack of shit, did you or did you not say:
"contrarian said...
Three years from now, house prices will be at least 50% below today's prices. 6/13/10 2:29 AM"
http://novabubblefallout.blogspot.com/2010/06/northern-virginia-weekend-bits-bucket_12.html
Yes or no???
It seems the only issue is whether there will be a double dip in THIS region. I'm glad that I bought what I did in 2008-2010. I doubt we will see 165, but I'm not losing sleep over it. Cheers!
Being one of the bears,
i have to say it looks like
Anon is preparing a Crow Pie for me.
I have about a year left to see where
the C-S goes.
now I still am bearish, but, it's driven by a couple of factors
1) The national trend is still downwards.
http://baobab2050.files.wordpress.com/2010/10/money-week_clip_image001.jpg
i suspect the National market is in capitulation, DC appears to be in the "New Normal" Phase.
It is not uncommon for the politicians to be behind the nation.
2) Price to Income is still overweighted. While it's not as crazy as before, it's still
coming downwards.
3) Interest rates are artificially supressed. QE2, QE, TARP, TALF, MMLCFDF, Fannie/Freddie/Ginnie
Credit enhancements, if rates were closer to normal, prices would have a lot more stability.
4) 29% of all mortgages in DC are underwater.
Look Employment is good, so that helps, but, the idea "We must buy now or be locked out forever is kind of dead".
I think there is a lot of room downwards, but, if Bernanke pushes
a couple trillion out, well,
nobody can invest against him
You go with that pat. Best wishes.
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