The S&P/Case Shiller® composite index for the month of May was released yesterday.
"'We see some seasonal improvements with May’s data,' says David M. Blitzer, Chairman of the Index Committee at S&P Indices. 'This is a seasonal period of stronger demand for houses, so monthly price increases are to be expected and were seen in 16 of the 20 cities. The exceptions where prices fell were Detroit, Las Vegas and Tampa. However, 19 of 20 cities saw prices drop over the last 12 months. The concern is that much of the monthly gains are only seasonal.You can see the prior data we had in the post for April on this blog. The price gains have been adjusted downward.
'May’s report showed unusually large revisions [emphasis mine] across some of the MSAs. In particular, Detroit, New York, Tampa and Washington DC all saw above normal revisions. Our sales pairs data indicate that these markets reported a lot more sales from prior months, which caused the revisions. The lag in reporting home sales in these markets has increased over the past few months. Also, when sales volumes are relatively low, as is the case right now, revisions are more noticeable.'"
36 comments:
I'm now saving a copy of the C-S spreadsheet every time it comes out. These revisions are becoming larger and larger, and are happening over many months in a row. I've pointed this out in the past, and wasted way too much time trying to point it out to a particular troll.
But here's what's interesting to me: March's report (released in May) showed an increase from roughly 181 to 183, following roughly seven months of declining prices (though during that period, they appeared to be increasing since new reports were later revised). Then the April report (released in June) showed that the Jan-Feb revised numbers to be 181.6 down to 181. Now this report is showing that time period going from 181.5 down to 180.3.
Notice there are a few really interesting things happening. First, that this is a repeating pattern. This is happening every month, without a good explanation (I'm not sure I quite buy the excuse from the providers of this data). Second, these revisions are reiterative and continuous. That is, they don't revise down one point from, say, Jan-Feb, revise back up 1/2 point, revise back down 1/4 point, etc. It's uni-directional. Thirdly, the immediate revisions are drastic. March was 183 a couple of months ago, 181 last month, and now it is 177.8.
I'm not going to pretend to know what's going on here, but if their revised numbers are apparently more accurate, then it means that their immediate reports are consistently overstating the DC regions RE prices. Every month sees a "huge bounce", which later is revised far below (even a decline in retrospect), but the subsequent month will be compared against these lower revised values to show another "huge bounce". This isn't unlike NAR's use of revised sales stats to always show an improving RE market, but I wouldn't dare accuse the folks managing the C-S data of being criminally complicit like the folks at NAR.
All I can take from this phenomenon at this point is that the previous two or three months' data is not at all reliable. This sucks since the data is already really delayed. We just can't trust any immediate figures about DC coming from their reports.
Kevin,
Wash is made up of micro-markets. The only way to know what is actually happening is to be on the ground.
Do I care about PWC, Loudoun and hell's half-acre? No. I only care about what I own or am buying.
So regional numbers (that include West Virginia) may be important to you for some (God knows why) reason, otherwise what is the point of the exercise? Even the worst bears have given up on the "it's moving in" nonsense.
As I've said too many times to count - if you can't stand a price drop of 10%, stay out of the market. It's not for day trader's.
If C-S doesn't interest you, that's fine. I too prefer to look at more micro-level data. But I don't think you should complain or criticize the dissection or discussion of Case-Shiller numbers in a thread titled "S&P/Case-Shiller® May Home-Price Index".
If you think this isn't relevant to ongoing discussions about the local housing market, you can always petition Harriet to stop posting it, or even ignore it.
"Kevin said...I've pointed this out in the past, and wasted way too much time trying to point it out to a particular troll."
Point taken. However, it is worth noting, I "got this" from the get go -- I simply dont wish to overemphasize how important or unimportant it is.
The far more important fact (which you did, begrudgingly, finally admit) is that when all revisions are said and done, prices are still rising (YOY), just not as much as previously stated.
Thanks to the revisions it is very interesting that the 2nd derivative (i.e. the YOY rate) is not nearly as positive as it once was. Last month, we were looking at unrevised numbers and assumed prices were rising 4% YOY. Now we understand that prices are merely rising at a 1% YOY clip.
Given that 1 year ago was roughly the end of the "buyers bribe" it could be that we are finally seeing its effects in that withiout the bribe, prices are no longer rising, but are in reality, stagnating.
Either way, this has to be a major kick in the nuts for some people who thought that all of the gains from March 2009 @165 were a result of the buyers bribe. Mid to late 2009, there were some here calling DC area buyers "idiots" because they were getting sucked in by the bribe, and that as soon as the tax credit was lifted, DC case shiller would go back down to 160 -- 155 -- who knows.
How ironic is it that 2 years later the "idiots" werent necessarily the buyers, but the ones who put so much stock into the effects of 8K on the DC market.
The point Kevin, even if you look at CS DC as a whole; it's not crashing as the bears predicted.
If you believe that CS DC is relevant to your housing decisions, then go with it. I've been looking at sub-markets since 2007 (and well before). I find only marginal interest in CS DC (which is way above the national figures).
Since we are discussing "CS DC", I believe my comments are relevant. Love to hear your insight on local markets.
I found it funny that the article in the last thread which talked about moving the mortgage interest deduction from $1MM to $0.5MM would hurt middle class urban buyers.
Seeing that most wealthy people have down payments that are 20+% we are talking about housing prices that are between ~1.2-0.6MM. Also over time the loan goes down so for people buying ~600K homes this would only be slightly impacted for one year. I guess my main point is this is really impacting people buying homes that are ~1.5-1MM. This hardly seems like middle class people even in urban areas.
VA- I think you are correct that most people take the standard deduction and many who are left get hit by the AMT.
Point taken. However, it is worth noting, I "got this" from the get go -- I simply dont wish to overemphasize how important or unimportant it is.
You wanted to retell what I was saying into an argument I wasn't making so you had some make-believe fodder for your trolling. I understand that, and I understand how what I was actually saying was "unimportant" in your view since it was meant to conjure thoughts and useful discussions rather than the banter of pointless and endless discussions. You were interested in the latter.
The far more important fact (which you did, begrudgingly, finally admit) is that when all revisions are said and done, prices are still rising (YOY), just not as much as previously stated.
Actually, the irony is that if you were paying attention to anything that I've said, if you could have observed what I've already pointed out which is that those "rises" are going to be revised downward significantly to the point that they could even be decreases, you'd stop wasting both of our time. You were acting all hot a couple of months ago when the C-S report was showing a significant rise between February and March. I pointed out then that the subsequent C-S reports are invalidating the perceptions made by previous reports, which you completely dismissed since it interfered with your agenda of deriding me. Well lo and behold, these revisions confirm that not only did prices not increase during that period, they FELL from 180.3 to 177.8. You ignored what I was saying and instead harped on the next month when there was a HUGE increase in the new numbers. Of course, those are downwardly revised and might show up being negative at some point in the future.
"those "rises" are going to be revised downward significantly to the point that they could even be decreases, you'd stop wasting both of our time."
OK then. Yes Kev, they "could" be revised all the way down to where they are decreases. Likewise:
"Of course, those are downwardly revised and might show up being negative at some point in the future."
Yes, they "might" show decreases in the future.
Yet -- sadly -- they have not.
I've already pointed out one recent month-to-month point where a 2-point increase turned out later to be a 1.2-point decrease. Funny that as I was calling this out back then and you were trying to argue about every other thing, you still are incapable now of realizing that I was right, and that those "gains" were not what they seemed. Care to take a bet on what the future revisions will show us about the past few months? You still think it's insignificant that a 5-point rise from March-April is later revised to a .3-point drop? You think that won't be revised again?
All I get from you for trying to point out these interesting phenomenons is obstructive trolling. Before, it was merely an observation that you wanted to dismiss. I think I found it sooner than anybody else did, at least so far as I can tell. When a 5 point increase can be revised into a decrease and you still cannot admit that this is significant, you are worse than having nothing to contribute, you want to obfuscate and dismiss others who do contribute.
"Kev said...Before, it was merely an observation that you wanted to dismiss. I think I found it sooner than anybody else did, at least so far as I can tell."
Actually, we (or at least HB & myself) talked alot about this 6 months ago when you werent here. Take a look at the first thing I noted when Feb CS came out:
"The Anonymous said...
As I noted before, Im skeptical of the MOM increase as it came in the (seasonally weak) winter. I would not be surprised if it is revised away next month.
That said, assuming it is not revised away, or assuming the revised MOM decline is smaller than last december, it does look like the 2nd derivative (i.e. the YOY rate) is increasing.
This one is a real shocker to me. As you can see, last May, prices were increasing +7.74% YOY. Slowly, the YOY rate decreased til October when the YOY increase was a more modest +3.09%.
I thus fully expected the YOY rate to go negative by next spring, as the 8K buyers bribe was worked out of the system, and expected to see the bears back in hysteria mode (all the while ignoring that we were still far far above the March 2009 level of 165.94).
2/22/11 2:42 PM"
FYI, I do not yet consider you to be back in hysteria mode...
"Kev said...When a 5 point increase can be revised into a decrease and you still cannot admit that this is significant,"
For the record, such a massive revision is significant. We now know that prices are rising much slower than we thought they were.
For the record, such a massive revision is significant. We now know that prices are rising much slower than we thought they were.
Or perhaps they're falling. Do you remember what last months "new" price level for DC was? Hint: it was higher than the new figure released. Not that I have any faith in those immediate numbers, but you're discounting the possibility that they're falling despite a) this month's numbers being lower than last month's and b) that excluding the past two months' data (which will doubtlessly be revised downward in the coming months) that prices have fallen for the preceding consecutive months. If you consider that last month's index mark of 186.76 was revised today to 180.5, what are the chances that the latest figure of 184.9 won't go below 180?
We're essentially dealing with two sets of data here: the past and the present. The present will be re-told in the future's revisions. Understanding this relationship is the only way to gauge this market with this index today. I first picked up on this a few months ago, first commented a couple months ago, and the divergence between current and revised numbers has become greater during that time. I don't know why this is happening or even what it means, but the perception that prices are still rising would have to completely discount this phenomenon and ignore any data going back past two months. You've seemingly accomplished this feat.
The whole reason I pointed this out a while back is because I found it "interesting". The narrative among the media (WTOP, NPR, etc) has always focused on what the immediate numbers showed. When you hear that "DC home prices rose 2 percent last month from the prior month" six times in a row, it's more than significant if the opposite is actually occurring.
"Kevin said...I don't know why this is happening or even what it means, but the perception that prices are still rising would have to completely discount this phenomenon and ignore any data going back past two months. You've seemingly accomplished this feat."
No - my "perception" that prices are rising are based on the actual numbers revised and unrevised. If you Kev, are perceiving that prices are falling you Kev have to completely discount the fact that the current data both revised and unrevised is showing prices are up.
Put another way, based on the downward revision trend, you have no actual data, but faith, that at the end of the day, when all revisions are said and done, the YOY results will be down, not up. And this could, at the end of the day be true. The point is, as of the here and now, it is not.
BTW -- I will grant you this. Up until this most recent month, when they would do their revisions, the pattern was (a) the previous month had a decent size revision, and (b) the revisons to the next 2-3-4 months were minimal. Thus, the 2nd derivative (both revised and unrevised) showed a similar pattern of roughly a 2 or 3% gain YOY.
Most recently, they (a) did a big revision to the previous month AND (b) much larger revisions to the next 2-3-4 months. As such, that 2nd derivative which (even revised) was showing a 2 or 3% YOY gain, is now showing a +1% gain.
Thus, as I noted in the last thread, it very well could be that the effect of the loss of the tax credit was large enough that it turned us all the way down to a stagnant market (IMO +1% YOY isnt statistically all that significant). Still, its nowhere near the idea that as soon as the tax credit goes away, we will smash below the March 2009 bottom, hitting 160-155 by summer 2011, but hey, its something...
Also, for the record (this has nothing to do with you Kev), thanks to the revisions, I feel it is worth revisiting my month by month prediction from last sept. I had quit posting it, largely becaus it was proving to be far too pessimistic. However, now thanks to the CS revisions, my prediction is not "far too" pessimistic, just pessimistic:
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%
2012
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%
If you Kev, are perceiving that prices are falling you Kev have to completely discount the fact that the current data both revised and unrevised is showing prices are up.
What current data? What was up in the last report is down in this report. Five point negative reversion.... that's enough to completely flip the trend. Go practice your derivative calculations on those numbers. You can't find anything past two months' worth of indexed numbers to show the market is rising, and it's near-certain that both of those numbers will be revised downward next month JUST like they have been doing the past three months.
That I've been explaining this to you for so long and you don't even understand it when the divergence is this ominous doesn't speak very well for you. You remind me a lot of some of the fresh MBA grads that I've worked with in the past. They know how to do what they've learned, at a very elementary level, but have no intuition or creative analytical skills to see what the data really is showing.
Put another way, based on the downward revision trend, you have no actual data, but faith, that at the end of the day, when all revisions are said and done, the YOY results will be down, not up. And this could, at the end of the day be true. The point is, as of the here and now, it is not.
Funny, I called this a while back and you were quite dismissive then as well. Will you feel utterly ridiculous if come six months from now only one of those 2011 months (in retrospect) was an increase? You've already lost February and March which were previously increases. The only month-to-month period on record since last summer that won't likely see significant revisions are the periods of decreases: July 2010 through March 2011, soon to be April.
Since you only claim to care about the YoY numbers (when it suits you) and if you want a real challenge, look at the YoY trends not just in one month's report, but previous ones as well. Do a line-by-line comparison of what the YoY changes were in say January when the figures first came out, and what they looked like a month or two later. Then compare the trends of YoY over time from there. I have already done this BTW, and I'll spoil the ending by telling you that a .55% downward revision of April's figure will have already put us YoY negative. As I'm sure you noticed when last month's report came out, those April numbers were a 4% YoY increase. So there you go, you're welcome.
Still, its nowhere near the idea that as soon as the tax credit goes away, we will smash below the March 2009 bottom, hitting 160-155 by summer 2011, but hey, its something...
For the life of me I don't see how it cannot revert to pre-credit levels. The numbers simply do not add up. What in my mind is not sustainable thus far has bucked my expectations and very well might continue to do so. But just like I couldn't except the housing bubble based on the limited information I had in 2005/2006, I can't accept that housing prices today can be 100% higher than they were a decade ago with only a corresponding 30 or 40 percent increase in household income.
If I had more C-S reports available in raw .xls form, I would do some times series studies and trend analysis to figure out what's going on with the divergence in the revised numbers. I really don't know, and like I said a while back, I just find it interesting. It's painting a different picture than most are seeing.
"Since you only claim to care about the YoY numbers (when it suits you)"
No -- thats pretty much all I care about. I really dont care about the MOM numbers. Reread everything I wrote in the prior thread, in the context of YOY versus (what you are apparently viewing as MOM) and it should make sense.
"Kevin said...For the life of me I don't see how it cannot revert to pre-credit levels."
Still? After all this time? We had this same discussion one year ago wherein you said you would
"bookmark this page so that down the road when we make up for those obviously artificial gains in the market and end up below your established "bottom", I can mock you in every thread for being wrong."
Since it was clear at the time we werent going to agree, I then asked you to give me your "bottom line" number to which you responded:
"Mark me down for 150 by next June."
http://novabubblefallout.blogspot.com/2010/06/northern-virginia-weekend-bits-bucket_12.html
Well even though June wont be out for another month, even you can see that this prediction will be (even when all the revisions are said and done) an epic and specacular, glug, glug, glug worthy bust.
so going forward, what will your "bottom line" be Kev? I stand by what I said before, that we do not go back down below 170. So what say you? Give me a time and a price so that we can see how prescient you are this time around...
cheryl
i know you find contrarian annoying but what do you think of the V Sup Ct ruling he cited
http://www.zerohedge.com/contributed/mers-gmac-stephan-us-bank-fraudclosure-supreme-court-affirms-homeowners-victory-us-bank-
so going forward, what will your "bottom line" be Kev? I stand by what I said before, that we do not go back down below 170. So what say you? Give me a time and a price so that we can see how prescient you are this time around...
Troll, I'm not making predictions, I'm saying that the fundamentals do not support the prices in a lot of areas. I've also rightly pointed out that prices are very likely not "up" as they've been falling since last July, and still could be today given the revisions. It's funny that since you only use YoY as a gauge that you take these immediate figures at face value despite them overstating our mark on the index by as much as 5 points. You couldn't even see this when it was pointed out to you. You an MBA, son?
"Kevin said...Troll, I'm not making predictions"
Well thats progress I guess. You know, Ive always thought you were a smart guy. Sure, rude at times but otherwise articulate, thoughtful and realistic. Yet last for the last year plus when you were denigrating the buyers as "idiots" and wondering why some of us reasonable posters "can be so blind", I really began to wonder about your judgment.
My suspicions were thus confirmed when you wrote that memorable "put me down for 150 by June". I remember looking at that incredibly agressive number in stunned silence and thinking to myself, "wow this guy truly is delusional...no mater how much I and others try and try and try to reason with him, he simply cannot and will not see how far off the mark he truly is...he will only learn with time"
Well time has indeed worked its magic and the last year has finally shown you how utterly terrible your judgment was at the time. Thus it is indeed progress that you have apparently tempered your expectations such that you do not want to subject yourself to ridicule by making your expectations public. So thats something I guess.
Yet last for the last year plus when you were denigrating the buyers as "idiots" and wondering why some of us reasonable posters "can be so blind", I really began to wonder about your judgment.
Did I denigrate buyers as idiots in the past year? I don't think so. I might have said such a thing about people who said "well the housing market found its natural bottom in 2009, everything is fine now," but not buyers.
And frankly I don't care what you think about my judgment or my intellect. You pretend to pay attention to the numbers, but your approach is as sophisticated as someone keeping up with the box score of a baseball game. You're less interested in what the numbers actually mean than you are the opportunities the numbers give you to taunt the other fans.
My suspicions were thus confirmed when you wrote that memorable "put me down for 150 by June".
I don't like making specific predictions. Not even Robert Shiller does that. I did it in a vain attempt to shut you up. YOU were the one nagging me to come up with a number, so I went with a figure that I thought corresponded with the market's fundamentals. That was my mistake. You've used that quote countless times over the months, proving that the only way to make you less of an obnoxious asshole is to not say anything. Wrong or right, you're going to act the same way.
You were in denial about the impact of the tax credit. Though this market didn't revert at the same pace as the rest of the country, the numbers still show that you were wrong. You'll ignore this though and harp on the "OMG U SAID 150" narrative to derail any point I try to make. Your set-up last year was cute, I applaud you for that. A true bullshit artist always has a setup, an ace in the hole.
Go ahead and ignore all of the main points I've made. It's more expedient for you to take a single quote and repeat it ten times than it is to partake in an intelligent discussion. You couldn't even accept new phenomenon within the data.
So do you have an MBA? You're dodging this question.
pat,
I don't know if "annoying" is the right term for contrarian...I'll have to think about that.
As for his cited case. I give it a great big SO WHAT!
What concerned me at first blush was the "with predjudice" language, but a reading of the opinion eliminated that issue. The lender is free to refile. The issue was the "timing" of filing proof of ownership of the note - in this case it came too late. The appeals court suggested that a filing prior to summary judgment (even if after the initial suit was filed) would have been sufficient. Dates of transfer were missing. Ministerial in my opinion. A hollow victory for the homeowner as suit will be refiled.
"Kev said...Did I denigrate buyers as idiots in the past year? I don't think so. I might have said such a thing about people who said "well the housing market found its natural bottom in 2009, everything is fine now," but not buyers."
Heres one of the quotes. There are others...
kevin said...
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.
9/29/09 3:26 PM
http://novabubblefallout.blogspot.com/2009/09/s-july-home-price-index.html
+++++++++++++++++++++++++++++++++
"Kev said...You were in denial about the impact of the tax credit. Though this market didn't revert at the same pace as the rest of the country, the numbers still show that you were wrong."
How so? Was it when I said things like this:
"The Anonymous said...
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. 10/27/10 9:04 AM"
http://novabubblefallout.blogspot.com/2010/10/s-august-home-price-index.html
I can provide a dozen or similar examples if you would like. I was wrong in the sense that I thought the waning tax credit would have pushed CS into the low 170s by now, but that is proving to be too pessimistic. Is that your gripe?
+++++++++++++++++++++++++++++++++++
"kev said...You've used that quote countless times over the months, proving that the only way to make you less of an obnoxious asshole is to not say anything. Wrong or right, you're going to act the same way."
Not necessarily. Its only the agressive predictions that get me going. And even if one is made, you can shut me up by policing yourself, and getting out ahead of it. Case in point, HB did this once, and then as soon as his call went bust, he flogged himself with a "man I cant believe how I f*cked that one up" and never heard a word from me. Thats always an option for anyone here.
For the record, I do respect the fact that you are here taking all this flack I am giving you. Alot of people when making that call would have run away by now (i.e. Spider, TBW). At least you have the decency to stand in here and take it.
++++++++++++++++++++++++++++++
"Kev said...So do you have an MBA? You're dodging this question."
Sorry -- I didnt know this was a sincere question. No, I do not have an MBA.
Heres one of the quotes. There are others...
That was attributed to people chasing the $8k bribe. That wasn't a pejorative directed towards all buyers. Try again.
Its only the agressive predictions that get me going.
What aggressive predictions? You practically begged me to come up with a number, which I reluctantly (and regrettably) did. Where's the aggressive part? That I was adamantly professing that the credit blew air into the housing bubble? I stood by that despite your immature taunting. I stand by my assessment that - as a whole - prices in the DC area are not supported by income or rental levels as they historically were. You don't want to debate this, you want to harp on the 150 mark.
Give it up, you're a broken record. The time has long since passed when you showed any real interest in what the housing market's numbers were telling us. Now you just look at the bottom line, throw around the term 'derivative' (have you taken differential equations? do you understand how derivatives work?) based on flawed numbers (did you bother taking up my challenge and observe how your YoY derivatives are severely altered with the revised data??), and recoil if someone wants to deviate from your anti-intellectual bantering.
For the record, I do respect the fact that you are here taking all this flack I am giving you. Alot of people when making that call would have run away by now (i.e. Spider, TBW). At least you have the decency to stand in here and take it.
I fully accept being wrong, even if my bad prediction was only made to placate a troll. I've analyzed this market (and others) endlessly to try and find a quantitative or even psychological/sociological justification for our market to hedge the fundamentals which underlay the prices. I've found nothing substantive so far, and can only conclude that despite a significant time lapse compared to other markets' reversions, we will continue to see one in the DC area. You cannot have a near-doubling of home prices over a period where household income is only up 30 or 40 percent and expect that to be sustainable.
"Kev said...That was attributed to people chasing the $8k bribe. That wasn't a pejorative directed towards all buyers. Try again."
Ahh I see. So the people chasing the 8K and buying at prices not to be seen again are "idiots", but their neighbors, buying at the same time but not caring about the 8K are not idiots. Gotcha. I am vanquished.
+++++++++++++++++++++++++++++++++
"Kev said...What aggressive predictions? You practically begged me to come up with a number, which I reluctantly (and regrettably) did. Where's the aggressive part?"
A call of 150 in a year, which would be approx a 15-20% annual decline from where we were at the time. To me thats agressive and speaks volumes about your judgment at the time. Hopefully, it is better now.
++++++++++++++++++++++++++++++++
"Kev said...I stand by my assessment that - as a whole - prices in the DC area are not supported by income or rental levels as they historically were. You don't want to debate this, you want to harp on the 150 mark."
I dont dispute this. The difference between you and I can be thussly explained as follows.
I believe that fundamentals are out of whack, but close enough such that they will (thanks to price stickiness, low inventory, etc) re-allign themselves via a stagnant period of nominal prices. Thus, I think that CS will trade in a range of 170-190 while inflation and incomes continue to play catch up til fundamentals are supported.
You believe (or at least believed) that fundaments are not close enough such that nominal prices can be maintained. Yoou believe (or at least believed last June) that something was going to happen that would cause a market to suddenly switch from a slowly rising one to a "KABOOM" type market where we would suddenly go thundering down to a CS level of 150 in a years time.
Correct me if that is wrong.
Ahh I see. So the people chasing the 8K and buying at prices not to be seen again are "idiots", but their neighbors, buying at the same time but not caring about the 8K are not idiots. Gotcha. I am vanquished.
Cut the sarcasm, dick. Someone chasing an 8k bribe and bidding up the price on a house by 40k is an idiot. My opinion on this now is the same as it was a year ago and two years ago. Both anecdotal and in the aggregate, my observations and hypothesis were correct. If you have any sense of finance, then you should probably stop whining about my opinion that paying 40 bucks to get 8 bucks back is idiotic.
I dont dispute this. The difference between you and I can be thussly explained as follows.
I believe that fundamentals are out of whack, but close enough such that they will (thanks to price stickiness, low inventory, etc) re-allign themselves via a stagnant period of nominal prices. Thus, I think that CS will trade in a range of 170-190 while inflation and incomes continue to play catch up til fundamentals are supported.
You believe (or at least believed) that fundaments are not close enough such that nominal prices can be maintained. Yoou believe (or at least believed last June) that something was going to happen that would cause a market to suddenly switch from a slowly rising one to a "KABOOM" type market where we would suddenly go thundering down to a CS level of 150 in a years time.
I don't disagree with your opinion given the market's slow reversion. Remember the party you threw for yourself when I confided with you that I accept this as a possibility? Since we are clear on that and in agreement about the fundamentals not supporting current home prices, I would not rule out continual declines.
Now get over the 150 comment. That was where I thought the market could be supported and I only said that because you were obnoxiously hounding me to make a call. You can bring it up all you want but it is utterly irrelevant beyond fueling your petulance. You're so fucking obsessed over everything somebody says, yet you have zero capacity to understand the context or even READ what the person actually wrote, as is evidenced above by your misunderstanding over my comment regarding tax-credit chasers.
"Kevin said...I don't disagree with your opinion given the market's slow reversion. Remember the party you threw for yourself when I confided with you that I accept this as a possibility? Since we are clear on that and in agreement about the fundamentals not supporting current home prices, I would not rule out continual declines."
Out of curiosity, "Continual declines" to where? I assume you now think 150 is off the table, but other than that, it is unclear what you think is the most likely scenario. Do you still think that we will retest the March 2009, 165 bottom?
Note, answer this if you want, but obviously you are not obligated to given my penchant for calling people out on wrong calls. For the record, I believe youve eaten a big enough piece of humble pie such that I will not mercilessly hound you if this future prediction (if made) goes belly up. I am however curious as to where you believe we could be going (in CS terms) and when we will hit them.
I'm not making any more specific calls on this. At the same time, you should re-evaluate your opinion that prices are definitely going up, even YoY. If March isn't revised below its 2010 counterpart, April and May most certainly will be. April will also likely be the only MoM increase in a span from last July through at least May of this year. That doesn't mean the prices won't flatten out there, but they're still hovering in the air with some form of gravity pulling them down, and absent any surge in employment and wages in the region, the sticky-market side of the equation is the side of the equation that will have to revert. Inflation won't raise or cause the fundamentals to meet housing prices if wages remain stagnant (or possibly fall), the prices of everything else rise, and interest rates go up.
"At the same time, you should re-evaluate your opinion that prices are definitely going up, even YoY. If March isn't revised below its 2010 counterpart, April and May most certainly will be."
As I noted, I was expecting some revision and building that into my predictions. That said however, as I noted before, I was surprised by the severity of the most recent revisions as they were much larger than the incrimental ones CS has been doing for some time. As of this moment, while I am still of the opinion that April & May are (even with the revisions) up YOY, rest assured if they are not, I will say "I was wrong", and you get to rip into me accordingly.
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"Kev said...That doesn't mean the prices won't flatten out there, but they're still hovering in the air with some form of gravity pulling them down, and absent any surge in employment and wages in the region, the sticky-market side of the equation is the side of the equation that will have to revert. Inflation won't raise or cause the fundamentals to meet housing prices if wages remain stagnant (or possibly fall), the prices of everything else rise, and interest rates go up."
Thats all fine and good. I just wish I knew what you thought all that would mean, at the end of the day in terms of price and time. My suspicion is that you still think that 150, perhaps 155 is likely but are unwilling to put it in writing. Thus, given that you are not providing us with a easy to track prediction, if it gets down to 175 and you start crowing "see I told you so" (even though you privately thought 155 was in the bag), dont be surprised if no one here gives you credit for your prescience.
Likewise, recall too that I have said for 16 months now, I am allowing for the possibility that things will go all the way back down to 170. I know this makes you angry in that as much as you want to paint me as a robert type bull, I refuse to come off that 170-190 range for now simply cause I see this as the most likely outcome. In any event, just keep this in mind as I suspect if we ever do hit 175 in a years time, you will be "bookmarking this discussion to mock me", when the irony is, that is exactly what I thought was the most likely outcome in the first place.
I don't understand the big deal about CS. Overall it represents the health of the regional market - which is important. On the individual level do any of you really want to pay retail? Are you spending hours and hours pouring over endless data so that you can buy at an "average" or "fair" or "historically correct" price point?
Not me. I don't waste my time on minutia. I track deals not CS.
Kevin - where are you getting your rent stats? This has been the best LL market I can remember. Some charts might suggest 1997 and 1998 were very good and I don't disagree; but there weren't the hugely discounted reo's and shorts available then. I have seen a doubling in prices in some neighborhoods (from bottom in 2008 and 2009 to now).
The Anonymous said...
I was surprised by the severity of the most recent revisions as they were much larger than the incrimental ones CS has been doing for some time. As of this moment, while I am still of the opinion that April & May are (even with the revisions) up YOY, rest assured if they are not, I will say "I was wrong", and you get to rip into me accordingly.
No ripping necessary as I'm sure that hurt a lot.
The main reason I was pointing out the revisions a couple months ago wasn't that it was necessarily a game changer (it wasn't, we were still "up"), but that all the reports I'd been reading over the months about DC completely hedging the national trend were seemingly less true when looking back at the revised numbers. So when I listen to WTOP on that last Tuesday of the month and hear that "DC was the only region where prices are up", then discover later that it actually wasn't the case, I know that pretty much all of the listening audience has absorbed the media's announcement and that it has altered the public's perception, even if the actual percentage difference from reality is seemingly insignificant. This might inspire a number of sellers to price poorly (highly), or a number of naive first-time buyers to capitulate to the asking price of the house they want to buy.
Likewise, recall too that I have said for 16 months now, I am allowing for the possibility that things will go all the way back down to 170. I know this makes you angry in that as much as you want to paint me as a robert type bull, I refuse to come off that 170-190 range for now simply cause I see this as the most likely outcome.
It doesn't make me angry. You like to make accurate guesses, and since I (obviously) see 170 as more likely than not, I'd question your judgment if you said it couldn't go below that level.
. In any event, just keep this in mind as I suspect if we ever do hit 175 in a years time, you will be "bookmarking this discussion to mock me", when the irony is, that is exactly what I thought was the most likely outcome in the first place.
I'm not in the business of throwing single quotes at people or bookmarking conversations. I try to remember people's positions and their rationale for the purpose of giving them credit if they bring up a variable I hadn't considered. I'm not very detail-oriented about online conversations unless someone says something that I find truly astonishing.
VA_Investor:
I don't understand the big deal about CS. Overall it represents the health of the regional market - which is important. On the individual level do any of you really want to pay retail? Are you spending hours and hours pouring over endless data so that you can buy at an "average" or "fair" or "historically correct" price point?
I don't pay a whole lot of attention to it, but it's what really caught my eye about the severity of the bubble several years ago, and it's useful in depicting how each market varies. Their methodology is pretty sound (or at least I thought it was until these revised numbers were so far off), and it's a good long-term accounting of home prices. Is it useful when it comes to evaluating a particular neighborhood, town, zip code, or even county? Not really, no. I have to find more specific demographic and sales data. In the past four years I've probably spent less than 10% of my time analyzing the aggregate reports such as C-S and the rest studying local markets, listings, sales, and underlying financial data.
C-S is very important when it comes to DC's policies about the economy and their housing subsidies/programs. That is why it is important.
Kevin - where are you getting your rent stats? This has been the best LL market I can remember.
A number of places. I've always kept track of the anecdotal rental rates. FHFA and NAR have some rental/ownership ratio numbers, but in specific areas I prefer to do periodic craigslist searches. So for instance the last house I made an offer on for $420k, the lowest comparable rental I could find in the area was for $2200/mo. My pricing had a good bit to do with anecdotal figures like that since it wouldn't put me in a negative cash-flow scenario were something unforeseen to have happened and I needed to rent the place out.
Like pricing in general, the rental market varies a lot across the region. Some areas it's a lot cheaper to own rather than rent, which make the LL situation perfect. Other areas like Arlington and DC, much less the case.
My point about the home prices doubling within a decade is that the market's fundamentals do not support it. When I see a house on the market in Fairfax (22030) sell for almost double what it sold for in, say, 2009, and there are no noticeable upgrades or added features made during that time period, I question how that's sustainable given only a 30 or 40 percent increase of household income during that same time period. It's not much different than looking at the housing bubble overall. Rents and incomes have remained in parity. Home prices in general are still off of both income and rental ratios. I don't think it's sustainable.
"Kev said...No ripping necessary as I'm sure that hurt a lot."
Nah -- not really. The key is to simply not give a shit. I mean this is a tangential issue on a largely anonymous blog. As such, why is it so hard for one to keep their ego in check and simply come out and just say they were wrong, when in fact they were wrong? I mean, in the overall scheme of things, who cares?
Note too that you can get out ahead of that by simply calling yourself out. By doing this you are gutting someone elses ability to hold something "over your head". Your opponent believes they have some power over you in that they think they can call you out and watch you squirm. However, there is little opportunity for your opponent to experience shadenfreude if one does not torque and squirm, but simply admit to whatever it may be.
It takes an attitude adjustment to do this, and a large amount of self awareness and candidness, but you should try it some time.
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"Kev said...It doesn't make me angry. You like to make accurate guesses, and since I (obviously) see 170 as more likely than not, I'd question your judgment if you said it couldn't go below that level."
Its not that it "couldn't" go below that level. Its just that I deem that "unlikely". There are a number of unlikely events which could cause us to go below that level -- (deflation, severe austerity, a dirty bomb, etc.) or even above that 190 high end (hyperinflation, a "new" new deal, etc. I just see 170-190 as the most likely of all outcomes given our current set of facts.
However, if the facts change (such as a prolonged govt shutdown, or on the flipside, some new govt support program) then you will see me adjust my projections accordingly.
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"Kev said...I'm not in the business of throwing single quotes at people or bookmarking conversations."
You can understand my skepticism given that last year you told me:
"I tell you what, I'll go ahead and bookmark this page so that down the road when we make up for those obviously artificial gains in the market and end up below your established "bottom", I can mock you in every thread for being wrong."
http://novabubblefallout.blogspot.com/2010/06/northern-virginia-weekend-bits-bucket_12.html
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