The S&P/Case Shiller® composite index for the month of September was released yesterday.
"'Home prices drifted lower in September and the third quarter,' says David M. Blitzer, Chairman of the Index Committee at S&P Indices. 'The National Index was down 3.9% versus the third quarter of 2010 and up only 0.1% from the previous quarter. Three cities posted new index lows in September 2011 -- Atlanta, Las Vegas and Phoenix. Seventeen of the 20 cities and both Composites were down for the month. Over the last year home prices in most cities drifted lower. The plunging collapse of prices seen in 2007-2009 seems to be behind us. Any chance for a sustained recovery will probably need a stronger economy.'
'Detroit and Washington DC posted positive annual rates of change and also saw an improvement in these rates compared to August. Only New York, Portland and Washington DC posted positive monthly returns versus August. It is a bit disturbing that we saw three cities post new crisis lows. For the prior three or four months, only Las Vegas was weakening each month. Now Atlanta and Phoenix have fallen to new lows too. On a monthly basis, Atlanta actually posted a record low rate of -5.9% in September over August. The markets are fairly thin, and the relative lack of closed transactions might be exacerbating the downside. The relative good news is that 14 cities saw improvements in their annual rates of change, versus the six that weakened.'"
24 comments:
Thought this article might be of interest to everyone who values these home price indexes. Nationally, we're nearly back at historical trend levels when considering real prices or price to rent.
Purple
Case-Shiller, CoreLogic and others report nominal house prices. However it is also useful to look at house prices in real terms (adjusted for inflation). In real terms, the National index is back to Q1 1999 levels, the Composite 20 index is back to May 2000, and the CoreLogic index back to April 2000. In real terms, all appreciation in the '00s is gone.
http://www.calculatedriskblog.com/2011/11/real-house-prices-and-house-price-to.html
Which only makes one wonder if the Immune areas will also retrace teh gains of the Zero's
New inventory numbers are out for December 1. Down, down, down. See the link on the right (mris/mls)
(Virginia mls - nova inventory)
cheryl
the DOM and sale price maps are very interesting.
honestly, the data seems all over the place.
inventory declining, but lots of weakness in pricing and DOM.
pat,
CS seems to show price stability (and, we are well off the 3/09 low of 165).
Where are you seeing the price and DOM maps? I'd like to see historical DOM (like 3 decades).
hb
http://warisacrime.org/content/why-iceland-should-be-news-not
what you don't hear about Iceland.
cheryl
http://www.rbintel.com/statistics
look at the map, then play iwth the tabs and buttons
pat,
I assume you are looking at the regional numbers as opposed by county by county? I see nothing alarming or, even, worrisome in the DOM data. IIRC, 60+ days is not an usual number, historically.
We seem to be making some headway in the economy, however slight.
Could you address my question as to why the so-called imunozones will suddenly change course?
As an aside, Steve Fuller see's big changes ahead for the local economy when the gov't cuts kick-in. I'll have to hear more of what he said a few days ago. If anyone was present or has a transcript, please chime in.
cheryl,
the laws of supply and demand apply to the rich as well as the poor.
If demand drops off, from below, it does hit everywhere.
I do think there is a utility argument. Housing is demanded by household formation, utility value, cost of funds, change in supply and consumer preference.
Now in the bottom half, the preference is changing to rentals.
The boomers are getting older,
money can't get any cheaper, can it?
and I know you laugh but the utility value of housing in lots of areas is the same.
Pat-
I think you missed the point of my earlier comments on Iceland. There were basically two main comments. The first was that Iceland is still not in great shape, but the far more important point was that they way they got out of what would have been a deflationary depression was letting their currency depreciate by 50%. Iceland is a small enough country that they could let their currency fall dramatically, which boosted their exports with out having a noticable impact on the world's economy. US & Europe on the other hand combine for about 50% of the worlds GDP. Because of their size and the fact that exports are zero sum, they can not use the same tactics as Iceland with out crushing all of their trade partners.
Also for your supply and demand argument about poor vs. rich you talked about the demand side, but you missed the supply side. Rich people are different in the sense they rarely need to sell. So if they don't get the price they want they will take the house off the market, unlike poor people that often do not have the ability to keep their house if anything bad happens. So if the demand truly dries up a lot of the supply will also dry up. At this point housing prices have been falling for 5-6 years in most places. It seems a little crazy to assume that as most of the country bottoms out that all of a sudden the immunozones start tankng dramatically. I think your best hope for them to start tanking is if the governmenet shrinks quickly and dramatically. Personally I just don't think this will happen, but we will see.
pat,
You should read the October study that came out of Steve Fuller's group.
It's a 20yr projection on regional job creation and housing demand. They break it down by demographics; wages of new employee's, household size, housing type that will be needed based on those factors.
They discuss the retirement of the Boomers and the lessingly demand for higher priced homes. In fact, the greatest demand will be for small, lower cost apartments as singles will be a major component. They go further to predict that the percentage of renters will reach 55% of the population.
Fuller's team believes that local jurisdictions way underestimate the future demand for additional housing units and predict 1 million+ new jobs over the next 20 yrs.
Surprisingly enough, they cite Loudoun as having the greatest new demand over the next two decades. The take away is that we need affordable housing and better transit if we are to attract jobs.
I apologize to those that don't really care too much about these predictions. Since I am a LL with mainly lower-end ($1,200 - $1,700) rentals, I am very interested.
HB
Economics apply to the rich as well as the poor.
Pat-
Of course economics apply to the rich that is my point. They are rich so they can control the supply the same way taht DeBeers does with Diamonds.
Saying that areas where rich people want to live can't go up more than average would also imply that prices in Manhattan would need to fall by 80%. Do all areas of the country that have had prices go up more than inflation need to fall or is DC special that it needs to revert to inflation but the fact that NY, LA, Boston, Chicago have had prices go up way faster than inflation for 100+ years is allowed.
When land is nearly unlimited like it is in most parts of the country I agree that housing will move with inflation, but when land is scarce housing prices do not need to move with inflation.
HB,
I don't believe pat will ever change his prediction(s). He throws out S. Arlington. Apples and oranges. He "cherry picks" places in who knows where. He grew up in Bethesda. Let's hear about that locale.
p.s. Where is contrarian?
http://www.irvinehousingblog.com/blog/comments/irvine-loan-owners-pose-highest-risk-of-strategic-default
i believe this will apply here as well
HB is iceland worse then they were in the 90's?
Pat-
Unemployment is higher than it was in the 90s and the nominal GDP graph is ugly. Total GDP in US $ is down 40% from peak and is still below where it was in 2004-2005.
http://www.tradingeconomics.com/iceland/gdp
Unemployment only goes to 2001, but unemployment is way higher than it was for most of the last decade
http://www.tradingeconomics.com/iceland/unemployment-rate
Other charts show the peak of unemployment in the 90s was about 5%. So yes the country is worse off now than in the 90s
Pat-
In addition to my above comment, whether Iceland is doing well is somewhat irrelevant to my point. My main point was the way they started to fix their economy was by devaluing their currency 50%, which increased their exports (namely tourism). The problem is that exports are zero-sum, so because the nations with a lot of debt make up well over half the world's GDP they realistically can't all export their way out of the problem.
HB
of course Iceland's GDP is down from 04.
04 was madness, it was when landsbank was robbing the life savings of dutch and english savers.
look back before, to 01, before the Neocons took over Iceland, that was the natural GDP of iceland.
it's up 40% from there.
The Greenspan global bubble was roaring in 04, no wonder things were good.
It's like comparing someone's metabolism after they've done two lines of coke.
Iceland is naturally a very poor country, they have little agriculture a small population, they don't sit on key trade routes, they make few products. They basically sell cod.
for a few years they made the country in a hedge fund.
now that thye' told the banksters to go to hell, and the criminals fled the country, we see things returning to normal.
And BTW, the US will ultimately have to devalue it's curency.
we run massive trade deeficits have for decades. when has that not ever led to currency devaluation?
HB
Iceland is worse off then the 90s.
Um Clue time. We have a global depression on.
Iceland is doing well relatively speaking.
Pat-
If you look at the second chart is shows GDP by year for every country in the world. Iceland has one of the slowest growth rates in the world from 2000-2009, so I am not sure why you think it is doing so great.
http://en.wikipedia.org/wiki/List_of_countries_by_past_and_future_GDP_(nominal)
As for the US having a large current account deficit and needing to fix its currency. I think we will depreciate our currency slowly and no where near 50%. Even if this is the case you have to understand that every country can not do this. Europe has almost no current accountr deficit, but they would also need to cut their currency because their banking system is dramatically larger than ours...
You just can't have the world economy grow through more exports.
HB
we are in a global stagnation,
so, you have to consider ti that way.
as for the export thing, you would have thought they would figure out that trade only makes sense if it's value added.
the US and Norway export sugar cookies to each other. Where's the value add in that?
HB Iceland has always had a slow growth rate.
For a reason.
it's a rock.
Surrounded by frozen seas.
The only places worse? Greenland.
people go to Iceland by mistake or as punishment.
aside from tourism, and Bjork, they don't have exports.
Fr a few years they got into Greenspan friedman craziness, now it's back to cod and cod beer.
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