The S&P/Case Shiller® composite index for the month of October was released on December 27th.
"'There was weakness in the monthly statistics, as 19 of the cities posted price declines in October over September,' says David M. Blitzer, Chairman of the Index Committee at S&P Indices. 'Eleven of the cities and both composites fell by 1.0% or more during the month. And even though some of the annual rates are improving, 18 cities and both Composites are still negative. Nationally, home prices are still below where they were a year ago. The 10-City Composite is down 3.0% and the 20-City is down 3.4% compared to October 2010.'
'In the October data, the only good news is some improvement in the annual rates of change in home prices, with 14 of 20 cities and both Composites seeing their annual rates of change improve. The crisis low for the 10-City Composite was back in April 2009; whereas it was a more recent March 2011 for the 20-City Composite. The 10-City Composite is about 2.4% above its relative low, and the 20-City Composite is about 1.9%.'"
27 comments:
ace
CT and Jersey have been part of the bubble.
http://www.downbythehipster.com/blog/2009/2/24/what-are-foreclosed-homes-good-for.html
http://www.swamppolitics.com/news/politics/blog/2009/06/fema_foreclosures_storm_shelte.html
foreclosed shadow inventory, always ideal for home values....
http://franklymls.com/AR7689657
7 years, -1% appreciation or worse.
1 year ago today, I had the following exchange (in sum) with Kevin:
ANON -- do you still believe CS is going back down to 165 or below?
KEVIN -- Yes, I am still confident that we will drop below that mark, even though household incomes have increased somewhat during that time.
http://novabubblefallout.blogspot.com/2011/01/s-october-home-price-index.html
Kev -- judging from your lack of posting recently, im beginning to think you have run away for good. If you are still here, are you ready to throw in the towel yet?
Pat,
So was NOVA, so I am not sure what point you are making.
Pat,
You continually provide anecdotes that are hardly compelling, are in the least desirable parts of Arlington, and do little more than illustrate what long term posters have always claimed.
The correct bears, were the ones in 2004 and 2005 that said things couldn't last and had to correct. That person was proven correct given the price history of this place.
Do you really think that listing means something? The bulk of the losses occurred "officially" in 2008/2009.
My $0.02
0.02 lots more losses to come.
underwater leads to a desire to avoid a pounding
Pat,
How do you figure? It doesn't take much more than $1200 a month to pay for a mortgage on a place like that and I had friends who were paying close to that in the late 90's to rent a duplex down there.
Furthermore, if your pet theories on under water owners abandoning their homes was anywhere close to accurate, you wouldn't see the investment phenomenon where most novice investors sit on their losers waiting for them to come back.
My $0.02
0.02
it's one thing to take a loss on equity, you bought RIM at 75, and it's sitting at 30, and you just can't abide the loss, but it's just sitting there.
It's a whole nother thing to buy Rim on Margin at 75 and every month have to put in another $5/share as it spirals down.
while shareholders will sit on dogs, you don't see that in the options or futures market.
it's one thing to be putting in $200/month on a condo that's going up, it's a whole nother thing to be putting in on the going down side.
The banks have been slow at foreclosing and moving short sales but if BAC continues being cash short and starts moving it's inventory it may spark some serious movement.
Who the hell knows, Bernanke may just give BAC another $5 trillion.
http://en.wikipedia.org/wiki/Strategic_default
A strategic default is the decision by a borrower to stop making payments (i.e., to default) on a debt despite having the financial ability to make the payments.
This is particularly associated with residential and commercial mortgages, in which case it usually occurs after a substantial drop in the house's price such that the debt owed is (considerably) greater than the value of the property — the property has negative equity or is "underwater" — and is expected to remain so for the foreseeable future, such as following the bursting of a real estate bubble. Such borrowers are called "walkaways."[1] The process of strategically defaulting on a home mortgage has been colloquially called "jingle mail" — metaphorically, one mails the keys to the bank.
Pat-
Why do you keep on saying that banks are cash short. That is the one thing they have way too much of. You could argue that BAC doesn't have enough equity (although it is currently way higher than any point in modern history), but their cash levels are just absurd. During the recession people have been increasing their deposits as they save more money and there are fewer good loans for banks to make, because of weak growth in the economy so they are just sitting on the cash. They are also shedding non-core assets to continue to increase their equity levels because the Basel III targets want banks to hold about multiples of the capital compared to the targets from before the crisis.
The only risk BofA has is basically legal risk due to the losses from Countrywide. Although in reality this is not a huge issues, because countrywide is its own entity to BAC could bankrupt this entity and that would pretty much end the legal risks related to these loans.
HB
I probably should have said the Banks are trying to shrink their balance sheets.
as for BAC, are't they carrying CW as an asset, they bought for 30 billion?
if CW goes bankrupt, that's a pretty big hit given the value of BAC?
"pat said...
HB
I probably should have said the Banks are trying to shrink their balance sheets."
THERE -- SEE HOW EASY THAT WAS!!!
You first made a ridiculous statement (banks need cash), and then when called out, you distanced yourself from it. And now its over, no harm no foul.
Contrast that to the time you made the ridiculous statement about no one ever getting into a bidding war -- ever. Multiple people called you out on that. Yet instead of quickly distancing yourself from it, you stubbonly dug in your heels, continuing to defend the indefensible, no matter how ridiculous it made you look.
Even worse, for the next 6 months whenever the issue was raised, you continued to stubbornly cling to your original position. At any point during that time, all you had to do was say something along the lines of "ok, well obviously it isnt so bad for some well disciplined people to sometimes engage in a bidding war" and that would have been the end of it.
Instead, that all came to a head a few months back when you admitted what some of us long suspected, you yourself had been in a few bidding wars. This made you look not only stubborn and disingenuous, but a hypocrite as well.
Pat -- this is not meant to re-open the debate on bidding wars -- so if that is how you plan to respond (or something about Myerton, Bernanke, or Cap rates), please save it. Instead, this is a comment on accountability/intellectual honesty when it comes to the postings on this blog.
Next time, save (1) me the trouble of being a dick, continuing to hold your feet to the flame, (2) you the trouble of looking ridiculous, evading my questions, and (3) all our fellow posters who learn nothing from our petty exchanges. Next time, when you make a little mistake like this, just fess up and move on -- no harm, no foul...
Pat-
I think that BofA bought countrywide for $4B and they have written down a lot of that already so I am pretty sure that they are only carrying it on their balance sheet as about 1B purchase price
Although even if it is $4b that really isn't a huge loss compared to Countrywides total liabilities. I am pretty sure that $4B is about one quarters worth of earnings excluding one time items like lawsuits. (although as a side note I am not sure they should call law suits a one time item, because they appear to lose ,major lawsuits every quarter...)
"you yourself had been in a few bidding wars. This made you look not only stubborn and disingenuous, but a hypocrite as well.
"
And you are wrong.
I have lost on a number of properties, but, to date, I've made single calculated bids. It has sucked emotionally to find a likeable deal and not be the closing party, but, I haven't put second bids.
so unless you have some property in mind, that I have forgotten about,
i'm going to say you are wrong.
HB
i thought i had seen somewhere that BAC was at balance sheet risk for CW
because they had taken on the liabilities.
well BAC is almost a penny stock, so something is causing the market to hate it.
"Pat said...so unless you have some property in mind, that I have forgotten about,
i'm going to say you are wrong."
I may be. In those cases where you made the single calculated bid, I thought there was already at least one other bid on the property. (i.e. your bid was the second bid) Is that not the case?
on some of the properties i bid there were 18 bids,
contrarian it sounds like inverse re-hypothecation.
They don't hypothecate the assets, they hypothecate the liabilities.
"
I may be. In those cases where you made the single calculated bid, I thought there was already at least one other bid on the property. (i.e. your bid was the second bid) Is that not the case?"
yes but I had no idea what the other bids were. see the agents are not supposed to tell you the amount of the other bids, so, you make your best guess in the blind.
now what it takes to go past that I don't know, i make my best bid and go with that.
"Pat said...yes but I had no idea what the other bids were. see the agents are not supposed to tell you the amount of the other bids, so, you make your best guess in the blind."
Precisely. Remember, for a long time, posters would come here and regale us with stories about how a realtor at an open house told them there were already "1 or more other offers pending". The poster would then say how he told them "thanks but no thanks" and would walk out, and that would be met with high praise from our commentariat... pleased that someone was standing up to the "realtard tricks", and urging them "not to get into a bidding war"...presumably because we buyers were so emotional and had such little self control that we would not be able to stick to our reserve price. The idea was, wait it out...eventually the other bidders will go away, and we fence sitters will be the only ones there to bid.
Thus, by you being willing to even bid on a property knowing that there is even one other bid out there, is the exact type of conduct that so many here disavowed.
As an aside, I have no problem with what you did. I assumed that some people did infact have some self control and could make a bid without getting so emotional as to automatically hit the escalation button and end up outbidding everyone, no matter the price. Moreover, given that you did not end up purchasing multiple houses, it looks like you are indeed one of those people who does have such self control.
Anon,
What Pat implies is he always goes in with his highest allowable reserve price. Seems like an unwise strategy. You would think you'd underbid a bit to see if the seller was willing to come down.
My $0.02
Hopefully, things will start to turn around, thanks to a new year in 2012!
-Jackie @ Home Value CT
Great post, thank you for sharing with us! AHMSI complaints
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