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Home Prices Double Dip Validated As Unadjusted Case-Shiller Numbers Indicate Third Sequential MoM Decline
After a third sequential decline in unadjusted Case-Shiller housing prices, is it ok to come out of a contrarian shell and proclaim the government-subsidized home price appreciation rally dead? Afdter the unadjusted Composite-20 reading peaked at 146.7 in September, the index has slowly declined for 3 months in a row and is now at 145.9. The only good thing one can say is that the rate of decline has not accelerated. However, with just over a month left on MBS QE, we are not very hopeful for a second V-recovery to appear in home prices any time soon.
Here is the monthly change:
Below is the index unadjusted data for the past several months, and the year ago month:
The same data on a MoM % change basis:
And as YoY % change:
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But...but...scroomberg just told me housing prices climbed for the seventh consecutive month..is it too late to get in on the action?!?!
The truth has been banned.
Remind me why you are looking at unadjusted data....
1. it's another view of the data
2. the adjustments may be spurious or misleading
And yet the headline on MSNBC is "Home prices gain for seventh straight month."
Sometimes ... you just want to jerk a knot in somebody's hair.
WTF DO YOU MEAN BY THAT? PLEASE EXPLAIN..........
MSM is reporting the index was up - nationally - .3%
nonsense cramer said we bottomed in june 2009.
I think the report shows that we have leveled off. Now we are going to scrape along the bottom for a long long time.
I had a discussion with a friend of mine yesterday who has been trying (for some time now) to purchase non performing residential real estate properties (lot's & homes) from the local lending institutions in and around Dallas, Texas. He told me that asset managers at the banks are all telling him that they are sattisfied in sitting back and collecting interest payments from those who can pay even though they know that the property is underwater and is likely to stay materially impaired.
The bankers are also not requiring their clients to put up additional equity. He tells me that this is happening because the regulators are NOT requiring the banks to take any action on any properties as long as the clients are making interest payments, which by the way have often been set well below market rates.
He tells me that the bankers are just waiting for a recovery. "Houston, we have a problem!" Herein lies our challenge going forward folks. This Case Shiller graph could look like this for years and years to come. Especially when you recognize that the financial institutions and regulators are applying this strategy to all assets, land, office buildings, homes, apartments and on and on and on.
I just don't get it. I was just entering the real estate business in the late 80's when the Resolution Trust Company was formed to handle that Real Estate bust, which was also impacted by the Oil industry. Anyway, what I do remember was that the regulators and FDIC weren't screwing around and letting the S&L's keep the crap on their books. They were liquidating that crap and closing down the S&L's as fast as they could, or it at least appeared that way. The Nation (and Texas where a lot of damage was done) did just fine during this period of mass liquidation. Was it painful for some? You bet it was and rightly so, it should have been. It's no different this time in that some stupid lenders made a lot of stupid loans to a lot of stupid buyers.
The RTC worked then, so why is the FDIC and the White House choosing the "kick the can" approach?
"The RTC worked then, so why is the FDIC and the White House choosing the "kick the can" approach?"
Money, of course. See my other comment below. The Bankers are in the drivers seat, and making money by dribbling out properties.
There's also the small fact that the FDIC doesn't have the funds to shut down all of the involvent Banks. If it wasn't for the Mark-to-Myth(Model) accounting fraud, the Big Banks would be insolvent, and that would require about $4 Trillion to cover their deposits. The FDIC is currently in the hole by about $20 Billion.
insufficient solvency is the reason for dawdling on
foreclosures....the system simply can't afford it....
the other major reason is that the banksters are making
debt slaves of all....under no circumstance will they
liquidate debt because the sheople are to be perpetual
slaves....
The RTC oversaw one of the biggest government give aways in American history. They simply flushed all the non performing loans out of the banking system at taxpayer expense. Many people became wealthy by purchasing loans for pennies on the dollar where the RTC didn't have the personell to evaluate collateral. There were stories of people buying loans and then finding checks to pay off the loans from the borrowers in the boxes of documents. I do believe in marking things to market, but there must be some mechanism to allow for market fluctuations in value without forcing a severe mark down in periods of panic.
agreed...rtc worked only for elite and is the reason banksters had no fear about irresponsible loans this time
around - the taxpayer would bail them out....in the mean
time it was party city for a bunch of sociopathic frat
boys....
I generally turn to CalculatedRisk for the definitive perspective on Case Shill
edit: CAPTCHA
37 times ____ = 666
JPM
I wouldn't write off the increases just yet. What's going on in California is that the Banks have woken up to the fact that they are completely, totally in the drivers seat, and can make money as fast as they want.
Inventory which is on the market is at historical lows. It's really amazing. And buyers are starting to panic, as they fear that interest rates are going to go up, and there's the loss of the $8,000 tax credit. Bidding wars have broken out (10-20+ multiple offers in some cases), driving prices up in the main metro areas.
Which is great for the Bankers. They can dribble out a few properties, and be assured of getting a really top dollar for them. And it looks like they can ride this gravy train for at least the next five years with all the inventory that they have.
All the while, driving the sheep to slaughter.
It's pretty stupid to look at monthly changes in seasonally unadjusted version of a series with a strong annual seasonality. I mean, what's up with that?
You can argue about the method of seasonal adjustment, but almost any adjustment to this series is better than no adjustment.
Or if you want to compute trend indicators that don't require seasonal adjustments, compute the second derivative: First, compute the 12-month change in the seasonally unadjusted series and the monthly change in that.
you are wrong...unless the adjustment has taken into consideration the new normal any adjustment is flat out
wrong to misleading....also, for the month over month
the seasonality is negligible....if we were crossing
seasons then perhpaps there would be a concern....
given the time frame, i accept the data as a reasonable
view of the data.
You should post Shiller's appearance on Hee-Haw this morning, there was fear in his eyes...
well slick since you're so smart how about you crunch the adjustment data and get back to us ptuomov
Can't wait to hear back from you.
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Looks like S&P just came out with a memo that says to ignore the seasonally adjusted data.