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January Case Shiller Data Atrocious: "At Worst, The Feared Double-Dip Recession May Be Materializing"

Tyler Durden's picture


Case Shiller data is out, and it is as horrible as ever. The Home Price Index came at 140.86 compared to 142.42 previously. Basically the double dip refuses to stop, and that even despite yesterday's "stunning"(ly irrelevant) pending home sales number.“Keeping with the trends set in late 2010, January brings us weakening home prices with no real hope in sight for the near future” says David M. Blitzer, Chairman of the Index Committee at Standard &  Poor's. “With this month’s data, we find the same 11 MSAs posting new recent index lows. The 10-City and 20- City Composites continue to decline month-over-month and have posted monthly declines for six consecutive months now. “These data confirm what we have seen with recent housing starts and sales reports. The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery. At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing."

From the release:

"Data through January 2011, released today by Standard & Poor’s for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, show further deceleration in the annual growth rates in 13 of the 20 MSAs and the 10- and 20-City Composites compared to the December 2010 report. The 10-City Composite was down 2.0% and the 20-City Composite fell 3.1% from their January 2010 levels. San Diego and Washington D.C. were the only two markets to record positive year-over-year changes. However, San Diego was up a scant 0.1%, while Washington DC posted a healthier +3.6% annual growth rate. The same 11 cities that had posted recent index level lows in December 2010, posted new lows in January."

The chart above depicts the annual returns of the 10-City and the 20-City Composite Home Price Indices. In January 2011, the 10-City and 20-City Composites recorded annual returns of -2.0% and -3.1%, respectively. On a monthly basis, the 10-City Composite was down 0.9% and the 20-City Composite fell 1.0% in January versus December 2010. Only San Diego and Washington D.C. posted positive annual growth rates in January 2011. These are the only two cities whose annual rates remained positive throughout 2010. Every other MSA has either moved back into or has always been in negative territory during the recent housing crisis. On a monthly basis, Washington DC was the only market where home prices rose in January, but up only 0.1%. The remaining 19 MSAs and both Composites fell during the month, with 12 of the markets and the 20-City Composite down by at least 1.0% versus December 2010.

“Keeping with the trends set in late 2010, January brings us weakening home prices with no real hope in sight for the near future” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. “With this month’s data, we find the same 11 MSAs posting new recent index lows. The 10-City and 20- City Composites continue to decline month-over-month and have posted monthly declines for six consecutive months now.

These data confirm what we have seen with recent housing starts and sales reports. The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery. At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing. A few months ago we defined a double-dip for home prices as seeing the 10- and 20-City Composites set new post-peak lows. The 10-City Composite is still 2.8% above and the 20-City is 1.1% above their respective April 2009 lows, but both series have moved closer to a confirmed double-dip for six consecutive months. At this point we are not too far off, and that is what many analysts are seeing with sales, starts and inventory data too.

Pretty much says it all. Full report.


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Tue, 03/29/2011 - 09:13 | 1112261 AN0NYM0US
AN0NYM0US's picture

DC is flying

Tue, 03/29/2011 - 09:14 | 1112264 SheepDog-One
SheepDog-One's picture

And highly likely DC soon will be burning.

Tue, 03/29/2011 - 09:20 | 1112280 JLee2027
JLee2027's picture

Great comeback

Tue, 03/29/2011 - 09:21 | 1112285 umop episdn
umop episdn's picture

I think that you've already seen this particular travesty of a bankster morality play. Don't spoil the ending for the rest of us. ;-)

Tue, 03/29/2011 - 09:39 | 1112355 oh_bama
oh_bama's picture

What is he talking about?

  • REcession has been over for 2 YEARS!!
  • And wealth effect is GREAT!
Tue, 03/29/2011 - 09:49 | 1112405 Coast Watcher
Coast Watcher's picture

You forgot the "/sarcasm" at the end.

Tue, 03/29/2011 - 10:06 | 1112489 Oh regional Indian
Oh regional Indian's picture

Everyone can start by calling it a DEPRESSION. The greatest ever, just cannot see it that way because SNAP is operational and Stars are dancign on ice and in Joe and Jane's eyes.

Double-dip, I'm sure most people thinlk tea-bags or ketchup when they hear that. Clever distraction deflection verbiage.

It's a DEPRESSION. Let's get over that hurdle already.


Tue, 03/29/2011 - 10:24 | 1112589 Trillax
Trillax's picture

Agreed, ORI.  Let's call a spade what it is: a depression that everyone is in denial over; and I'm not talking about the river in Egypt.  I understand the cycle of grief and people need to come to terms with it, however the time is nigh to finally (and collectively) pull our head out of our ass.

It is a depression. No matter how TPTB want to 'paper over' the facts.

Tue, 03/29/2011 - 12:07 | 1113054 Harlequin001
Harlequin001's picture

well I think it's rather bullish...

Just fills me with the urge to go out and buy a new house...

and to see if I can't find a bigger depth charge to strap my life savings to...

Tue, 03/29/2011 - 11:14 | 1112809 DeadFred
DeadFred's picture

My first thought when I saw the graph was "who got to name this a double dip?"  That anemic upturn isn't very impressive.  Terms like head fake and dead cat came to mind.  How much of that blip was the tax credit?  It looks like there's still a very big elephant in the room with us.  Let's talk about Libya instead.

Tue, 03/29/2011 - 12:07 | 1113065 Harlequin001
Harlequin001's picture

doesn't that look just like the early part of the DOW chart 1929 -1940....

How uncanny...

Tue, 03/29/2011 - 09:54 | 1112426 Capitalist10
Capitalist10's picture

Seriously, the only folks doing well are those sucking at the government tit in DC.  Time for some tar and feathers.

Tue, 03/29/2011 - 12:11 | 1113074 Harlequin001
Harlequin001's picture

Well actually Capitalist10, gold investors are doing OK as well...

so if you're a government employee who invested in gold, I should think you'd be more than a little happy...

Tue, 03/29/2011 - 09:23 | 1112292 slow_roast
slow_roast's picture

As soon as the government shuts down all those government workers who are "taking time off" can join the throngs of DC citizens in smoking crack and living on the streets.  Joy to the world.

Tue, 03/29/2011 - 09:18 | 1112271 TheGreatPonzi
TheGreatPonzi's picture

"Cash buyers" of 2009-2010 are now officially raped. Quite predictable. 

Tue, 03/29/2011 - 09:23 | 1112301 silvertrain
silvertrain's picture

More rental untits comming right up..

Tue, 03/29/2011 - 10:01 | 1112448 MachoMan
MachoMan's picture

In 09, we saw quite a bit of cash on the sidelines here piling into local low end residential properties for rental speculation.  Essentially, older folks shifted money from CDs into houses because the rental income paid a higher % than they could get on their money otherwise...  Recently, I think our market has gotten a little softer whereby these people are starting to hit the exits...  not a lot, but definitely starting to fray around the edges.

I do believe there will be a day of some semblance of price discovery...  but we've yet to see it.

Tue, 03/29/2011 - 10:23 | 1112572 Don Birnam
Don Birnam's picture

A neighbor of ours ( a retired gent ) engaged in the very transaction you describe: purchased a single-family property in late '08, for the rental income. The home, however, is situated in a plat in which the properties had been going for >450k during The Bubble's zenith; he likely bought lower than that, but I suspect the home has not appreciated at all, and the necessity for a premium rental rate ( the standard rates run likely $500 or so less ) has resulted in the place being vacant for several-month stretches at a time ( as it is now ).

Frankly, real estate speculation is perhaps the sharpest of falling knives for a speculating neophyte to catch. Yet, as you remark, some intrepid retirees seek this option, if income is desired; CD rates being essentially nil...but then there is that return of capital thing, isn't there ?



Tue, 03/29/2011 - 12:00 | 1113020 Pool Shark
Pool Shark's picture


Housing bottoms are really easy to spot; they're very wide, shallow curves. You can be nearly two years late in buying into them and still miss very little appreciation on the recovery.

Anyone who has studied this knows that the V-shaped 'bottom' in '09 was a head-fake. Just like anyone who bought the V-shaped 'bottom' in '91 missed the true bottom which didn't come until '96 (at least in California).

The real bottom in this market won't be here until 2014 (at the earliest). All you have to do is look at Shiller's chart of inflation-adjusted home prices going back over 100 years to see this: the housing bust cycle always lasts longer than the boom.

Even Cramer should have seen this... but of course, he's Cramer...



Tue, 03/29/2011 - 12:12 | 1113089 Harlequin001
Harlequin001's picture

Pool shark, I would say that the housing boom is now finished for at least one generation, maybe two...

Tue, 03/29/2011 - 12:53 | 1113239 Pool Shark
Pool Shark's picture


I agree Harlequin.

What I'm saying is that we're still at least a few years away from a bottom. After that, I don't expect any significant appreciation, or 'boom;' just a bottoming.

Unless, of course, the economy flies apart (good possibility); then all bets are off, and lookout below...


Tue, 03/29/2011 - 12:54 | 1113247 Harlequin001
Harlequin001's picture

yes old stick, currently donning my poo-proof pants as we speak...

and heading for the pub.

Tue, 03/29/2011 - 12:23 | 1113132 Dnice0123
Dnice0123's picture

Walt Clyde Frazier, is that you?

Tue, 03/29/2011 - 12:04 | 1113047 Harlequin001
Harlequin001's picture

in fact I seem to remember that it was predicted, many times right here on ZH...

Tue, 03/29/2011 - 09:17 | 1112276 lizzy36
lizzy36's picture

But pending home sales as reported yesterday were up 2.4%. Beating expectations.

We need to cling to this positive data point as evidence that the dreaded double dip (which presumes the first dip ended) will not come to fruition.

Tue, 03/29/2011 - 09:19 | 1112283 Tyler Durden
Tyler Durden's picture

Furthermore, you can/can't eat plutonium. Ths is deflationary/inflationary.

Tue, 03/29/2011 - 09:38 | 1112351 Spalding_Smailes
Spalding_Smailes's picture

What's up with gold ? All the swans are blocking out the sun in Chicago ....


Can you call up Lear and get some insider info ....

Tue, 03/29/2011 - 10:26 | 1112582 Pegasus Muse
Pegasus Muse's picture

It looks like you have again prematurely ejaculated your gold bashing jizz.  It must be tough 'cause you get so few opportunities to whip it out.  And when you do it is always a disappointment. 

This might help: 

PM Miners just went green on the day.


Tue, 03/29/2011 - 10:36 | 1112647 Spalding_Smailes
Spalding_Smailes's picture

Gold was in the same range OCT 20th, with all the new black swans we should be over $1,700 by now .....

Tue, 03/29/2011 - 11:55 | 1113000 Attitude_Check
Attitude_Check's picture

The action has been in Silver the last few months.  That will probably continue as the Gold/Silver ratio approaches 15 (Implying a much higher silver price if Gold stays range-bound).  That will change however, though it might be awhile.

Tue, 03/29/2011 - 12:19 | 1113112 Harlequin001
Harlequin001's picture

Hey Spalding, I answered that here at 9.01. You posted this at 10.36 having not answered my earlier post which deals specifically with this comment...

Got you sussed old stick...

Tue, 03/29/2011 - 12:18 | 1113106 Harlequin001
Harlequin001's picture

Hey Spalding, I answered that here at 9.01. You posted this at 9.38 having not answered my earlier post which deals specifically with this comment...

Got you sussed old stick...

Tue, 03/29/2011 - 09:20 | 1112287 JLee2027
JLee2027's picture

As Mark Twain said, "there are lies, damn lies, and statistics." Which means you can make "statistics" say anything you want with data manipulation.

Tue, 03/29/2011 - 09:32 | 1112329 johnQpublic
johnQpublic's picture

...but only 50% of the time...ask 80% of the people...90% of them will say this

Tue, 03/29/2011 - 09:43 | 1112382 TheMerryPrankster
TheMerryPrankster's picture

Coincedentally, the Obama administration just announced their latest economic recovery plan in coordination with the Federal Reserve. It only had 4 bullet points.


1. Lies

2. Damn lies

3. Statistics

4. Rinse & Repeat


I'm not a partisan fan of either tbtf political party, but it appears this plan was directly stolen from the Bush Adminstration, who used it sucessfully in 2 foreign wars AND domestic economic planning.

Tue, 03/29/2011 - 09:26 | 1112298 firstdivision
firstdivision's picture

Double Dip?!?  I only see a dead cat bounce.

Tue, 03/29/2011 - 09:33 | 1112333 Ruffcut
Ruffcut's picture

They say you can have a L shaped recovery.

The new normal. Positive is negative, just reverse the polarity.

Tue, 03/29/2011 - 09:18 | 1112277 qmhedging
qmhedging's picture

Need some Chinese buyers.Give free visa

Tue, 03/29/2011 - 09:49 | 1112408 SilverDOG
SilverDOG's picture

Assuming western stupidity has spread to Asia.

Tue, 03/29/2011 - 10:35 | 1112650 Tortfeasor
Tortfeasor's picture

Have you seen the overdevelopment in China?

Tue, 03/29/2011 - 14:01 | 1113512 crazyjsmith
crazyjsmith's picture

yeah, we did export something to China.  It's called Irrational Exuberance.

Tue, 03/29/2011 - 09:18 | 1112278 jkruffin
jkruffin's picture

Hopefully, everyone across the nation is writing their Congressional leaders and demanding the end to the QE experiment for good. It has only helped the wealthy stock owners of the highest levels, and the other 95% of the people are paying more for everything and have nothing, many not even a job.  This has to stop.  Trying to force a recover at the expense of the people must end.

Tue, 03/29/2011 - 09:35 | 1112337 HedgeYourself
HedgeYourself's picture

Agree with it should be ended. I fail to see how that will help housing though. Reverse to Bullard's slides will happen - interest rates will rise (potentially substantially, depening on debt appetite), stocks will tank, commodities will tank, housing will tank (driven by interest rates and backed up with upcoming of waves of foreclosures due to rate resets), commodities will tank. Dollar will gain :)

Or, what outcome you would expect ?



Tue, 03/29/2011 - 09:44 | 1112386 Godot
Godot's picture

"Hopefully, everyone across the nation is writing their Congressional leaders and demanding the end to the QE experiment for good......  This has to stop.  Trying to force a recover at the expense of the people must end."

Congress cannot control QE, as you know or should know.  They can, however, control the terms of trade agreements, which is where most jobs have been lost (that and productivity itself).  So, why not go after the real culprit instead?


Tue, 03/29/2011 - 11:05 | 1112767 barkster
barkster's picture

My congressman listen to me?  BAHAHAHAHAHAHAAAA! That was a joke, right?

Tue, 03/29/2011 - 09:20 | 1112282 baby_BLYTHE
baby_BLYTHE's picture

We're going into a Depression!

Tue, 03/29/2011 - 09:27 | 1112308 Long-John-Silver
Long-John-Silver's picture

Going? We've been in one for a couple of years.

Tue, 03/29/2011 - 09:59 | 1112441 WonderDawg
WonderDawg's picture

The depression started 2007-2008. We had a Fed manufactured reprieve, but they fixed nothing, only delayed the inevitable and magnified the ultimate damage. I think future generations will refer to what we are about to experience at The Great Collapse.

Tue, 03/29/2011 - 10:03 | 1112465 Neoisolationist
Neoisolationist's picture

Hey Blythe, that's going to happen regardless. the sooner it hits the easier it'll be. Massive hyperinflationary collapse a year from now (or two ) will be much worse to deal with then going into a depression now.

Tue, 03/29/2011 - 09:20 | 1112284 DutchTreat
DutchTreat's picture

Oops, what a catch 22 for Ben: should I keep interest rates low to (try to) save home owners or raise (to try to) avoid inflation.

Tue, 03/29/2011 - 09:29 | 1112317 Pladizow
Pladizow's picture

Ben truely is screwed.

When Lehman went under ARM's were resetting at $20 Billion/month.

In Nov of this year they go to $40 Billion/month.

What will happen if he raises rates?

What will Happen if he does not?

Tue, 03/29/2011 - 13:52 | 1113469 Jay Gould Esq.
Jay Gould Esq.'s picture

Pladizow, an aside:

A more perfect set I have yet to see. 

Tue, 03/29/2011 - 09:21 | 1112291 bania
bania's picture

Capitulation Nation

Tue, 03/29/2011 - 09:24 | 1112296 Long-John-Silver
Long-John-Silver's picture

There will not be a second dip. The original dip is still firmly in place hidden behind currency manipulation.

Tue, 03/29/2011 - 09:23 | 1112302 trillion_dollar...
trillion_dollar_deficit's picture

Gotta love how its spun by CNBS:

"Fall is less than expected."

Tue, 03/29/2011 - 09:29 | 1112320 TruthInSunshine
TruthInSunshine's picture

cnBSc is a government agency now, with Jeff Immelt in the White House, boyzzz.

Tue, 03/29/2011 - 11:59 | 1112599 Don Birnam
Don Birnam's picture

GE cut the NBC unit loose -- now under the Comcast umbrella. Big Media is Big Media, however. It's all the same thing, with all the same larboard bent.

Tue, 03/29/2011 - 09:38 | 1112362 SheepDog-One
SheepDog-One's picture

'Decline is less than expected' to all time CNBC can you name the person who had lower expectations than 'worst ever'? Who is that person?

Tue, 03/29/2011 - 10:33 | 1112632 MilleniumJane
MilleniumJane's picture

Bloomberg said it too.  Can't remember the exact wording but something like "This is in line with what we were expecting."  Then it was rah, rah, rah for recovering housing...then some asshole was talking about how the market is plagued by fear because of Fukushima but expect plenty of buys today because Japan is such a f-ing bargain.


Bloomberg has become my new Comedy Central.

Tue, 03/29/2011 - 09:26 | 1112303 Silverhog
Silverhog's picture

CNBC saying the drop was not as much as expected so we are to rejoice.  Willow now has my home listed at $23,000. below the all time low of April 2009. That is some big dip. But no double dip here, every thing is fine. How the hell can we get recovery with this crap. Market should go up 100+ points on such screaming positive recovery news.

Tue, 03/29/2011 - 09:32 | 1112321 oogs66
oogs66's picture

Yeah, as soon as I saw the numbers I saw it was a 'beat'.  I had to cringe knowing somehow this beat would be spun as positive!  All misses are bad data.  All beats, whether material, or a still awful number, are positive!  And really, -3.06 vs 3.20 is a beat?  Seriously its a rounding error!

Tue, 03/29/2011 - 09:24 | 1112305 morph
morph's picture

There will not be a double dip.  So long as you can lie about inflation you can always keep real growth positive.

Tue, 03/29/2011 - 09:34 | 1112340 A Man without Q...
A Man without Qualities's picture

Yes, this sort of thing tends to work, until suddenly it doesn't.

Tue, 03/29/2011 - 09:38 | 1112361 morph
morph's picture

It's okay. When YOY CPI is -99.999% real growth rockets

Tue, 03/29/2011 - 09:26 | 1112307 AN0NYM0US
AN0NYM0US's picture

take a look at the non seasonally adjusted data

Tue, 03/29/2011 - 09:47 | 1112396 Duuude
Duuude's picture

Nice catch


Non seasonally adjusted=140.86


Tue, 03/29/2011 - 10:05 | 1112486 oklaboy
oklaboy's picture

great link, thanks

Tue, 03/29/2011 - 09:28 | 1112309 Henry Chinaski
Henry Chinaski's picture

People ask me "how's the RE market."   My reply is "bouncing along the bottom."  I see scenarios where it could get worse and not as many where it gets better.  If your holding period is less than 10 years don't buy yet.

Tue, 03/29/2011 - 09:57 | 1112434 Lucius Corneliu...
Lucius Cornelius Sulla's picture

I'm starting to think about low balling some investment property.  25-30 percent lower than asking.  

Tue, 03/29/2011 - 10:08 | 1112473 Cow
Cow's picture

Reasons for housing to go up in value: 

1) interest rates will go lower

2) more people will be able to afford a house because they have jobs and are getting a raise,

3) the cost of living is going down, so the percentage of their paycheck that goes to housing can go up,

4) the number of houses on the market is going down and there is no shadow inventory at the banks that is coming on the market soon.

5) banks are making it easier to buy a home by having the buyer put less down payment

6) the costs to own a home are going down because taxes and insurance are going down.

Happy days are here again.

Tue, 03/29/2011 - 10:43 | 1112677 baby_BLYTHE
baby_BLYTHE's picture

So we should wait to buy a home?

Tue, 03/29/2011 - 10:11 | 1112508 WonderDawg
WonderDawg's picture

Bouncing along the bottom is an optimistic view. My belief is more like, artificially levitating thanks to .gov manipulation, which when it ends will result in another 50% drop.

Tue, 03/29/2011 - 10:27 | 1112602 Don Birnam
Don Birnam's picture

Henry: +1

Tue, 03/29/2011 - 09:30 | 1112315 silvertrain
silvertrain's picture


Tue, 03/29/2011 - 09:32 | 1112323 f16hoser
f16hoser's picture

Break out the champagne! Double dip is here again! Not sure we left the first dip.

Tue, 03/29/2011 - 09:34 | 1112330 oogs66
oogs66's picture

btw, Ireland and Portuguese bonds are lower every day and no one cares.  This market is also starting to have the feel that uber fast money guys keep it propped up, but cannot sustain the initial wave of cash selling when stocks open.  Retail is not buying into this anymore I don't think.

Tue, 03/29/2011 - 09:35 | 1112336 Archimedes
Archimedes's picture

Well according to this Genius Housing can no longer hurt the U.S. Economy!


Tue, 03/29/2011 - 09:42 | 1112367 SheepDog-One
SheepDog-One's picture

Economy is dead, therefore the economy cant hurt the economy any longer.

Tue, 03/29/2011 - 14:10 | 1113543 crazyjsmith
crazyjsmith's picture

But the Zombie Economy enjoys human brains along with a nice Chianti and some Fava Beans.    

Tue, 03/29/2011 - 09:48 | 1112411 DonnieD
DonnieD's picture

Typical Keynsian spin - the industry has been so obliterated by poor gov't policy and corrup bankers that the negative impact to GDP is only marginal. Screw the individuals caught up in this nightmare.

More homeowners are falling into the negative equity category and this can have dire consequences in a recourse state. There was an article in our paper over the weekend about a large credit union getting aggressive in going after deficient loans. The people that thought they walked from the American Dream aka a gov't/bank induced nightmare are now getting chased down for the balance.

Tue, 03/29/2011 - 10:11 | 1112519 oklaboy
oklaboy's picture

the name of the writer should have given it away, NUTTING, seems he had his nutting along time ago. 

Tue, 03/29/2011 - 09:36 | 1112341 lordcoke
lordcoke's picture

this data is irrelevant. all that matters is that we still have plenty of little brown people to incinerate.  god bless america!!!

Tue, 03/29/2011 - 09:35 | 1112344 johnQpublic
johnQpublic's picture

garlic and onion dip

Tue, 03/29/2011 - 09:38 | 1112358 whatz that smell
whatz that smell's picture

buy the fugging double dip, bitchz.

Tue, 03/29/2011 - 09:40 | 1112363 Republican Lackey
Republican Lackey's picture

This is really inflationary. Hyperinflation is right around the corner. Buy gold or you will perish!

Tue, 03/29/2011 - 09:41 | 1112364 WineSorbet
WineSorbet's picture

And just wait until interest rates start rising again.  Look out below!

Tue, 03/29/2011 - 09:43 | 1112374 SheepDog-One
SheepDog-One's picture

Bernanke with his nuts in a bear trap heard saying 'Im alright...dont worry I got this...'.

Tue, 03/29/2011 - 09:49 | 1112401 Republican Lackey
Republican Lackey's picture

Bernanke was never disillusioned about the eventual ending.

Tue, 03/29/2011 - 09:50 | 1112416 bob_dabolina
bob_dabolina's picture

So if I listened to John Paulson when he told us to buy houses at the end of last year how much less would my house be worth today?

Tue, 03/29/2011 - 09:52 | 1112418 snowball777
snowball777's picture

And now for a scientific question: do vultures eat the carcasses of other dead vultures?

Tue, 03/29/2011 - 10:31 | 1112623 LFMayor
LFMayor's picture

The answer is no... I hit one with a pickup truck in '93, it remained in the ditch until it dried up and blew away.  Maybe the others were partial to hutia and mangrove crabs, but in any case they never touched their departed brother.

Tue, 03/29/2011 - 09:54 | 1112430 RunningMan
RunningMan's picture

Classic problem is that most sellers still cling to the notion of what their home was worth at the peak. They discount too little, if at all, and then act shocked when their house doesn't move. This is a multi-year phenomenon we are seeing play out and won't end for at least another two years (not even accounting for the whole shadow inventory/foreclosure effect).

Buyers are more wary (rightfully so), and will return when there are real deals to be had. Now the issue of the double-dip recession is a separate but linked issue. We had so much of the new economy linked to home-building/renovation/furnishing that a decline in sales is likely to pressure the economy further (not sure where all the GDP gains are supposedly coming from).

I think another 15-20% decline in prices is realistic. Just a question of how long it takes to get there.

Tue, 03/29/2011 - 15:10 | 1113766 nkktwotwozero
nkktwotwozero's picture

>I think another 15-20% decline in prices is realistic. Just a question of how long it takes to get there.


"100 Years of Chicago Land Values" goes into this in great detail.


But for Chicago from years 1833-1933, 90% declines from peak to through were recorded.

That was for top of the line (most bubbly) residential real estate.


Commercial real estate was more levered, and came down even harder in top areas.

97%+ in some instances.


Average areas come out to about 80% declines.


Of course. All of this is in a hard money era.  But the basic mechanism was the same.

Real estate market goes from nearly 100% *credit* to nearly 100% *cash*.


US had a clear 100% credit residential real estate peak in 2005-2006.

Continued by extraordinary Federal credit policy post 2008-2010.


We're still a long way away from 100% cash markets.

We might get there with a combination of inflation and nominal declines however.


100% cash buyers @ 80+% decline (real or nominal) in real estate may signal a bottom.


As for length of time. There's a description from the "top":

Phase 1 - 18 months - 

Most levered players are wiped out, prices drop 20-30%

Phase 2 - 12 - 18 YEARS -

Secondary buyers, generally more conservative credits, live through the next 30-40% decline. "Anchored" to buying price.

Phase 3 - death and taxes -

Inheritance of property occurs. Sold at market value. (80%-90% top).

Phase 4 - Basement -

Usually bought for cash by "strong hands" held for rental value.

Positive cash flow. Usually accompanied by strong deflationary trend for material prices.



Tue, 03/29/2011 - 09:59 | 1112440 Cow
Cow's picture

Reggie Middleton said the Cash Shiller Index only includes single family homes.  That leaves out REOs, foreclosures and condos, which seems crazy.  He said it throws out these items as outliers and thus smooths out the index.  Doesn't seem like a good indicator, but it's one of the few that is out there. 

Beats the hell out of the "Pending Home Sales".  WTF! I'd like to see some empirical review of that index.

Reggie rocks

Tue, 03/29/2011 - 09:58 | 1112443 Pants McPants
Pants McPants's picture

Ahhh, DC and San Diego are doing fine.  No surprises there.

Coincidentally, I've lived in those two cities within the last five years.  California is understandably ignorant of things that occur outside of California. 

Most DC folks are buckling under the weight of their own crosses (gay rights, public education, etc.) to see the larger picture.  The beltway is a modern-day moat, within which citizens maintain their Soma-crazed lifestyles.  More than a handful of acquaintances of mine suggested DC is a model for what would work best for the remainder of the country.  Good grief.

IMO, DC is a powderkeg.  The city won't last two weeks under the onslaught of protests on the scale seen overseas.

Tue, 03/29/2011 - 10:05 | 1112468 GOSPLAN HERO
GOSPLAN HERO's picture

In DC world -- they all eat well at the federal trough.

Tue, 03/29/2011 - 11:33 | 1112913 Fascist Dictator
Fascist Dictator's picture

IMO, DC is a powderkeg.  The city won't last two weeks under the onslaught of protests on the scale seen overseas.

It's gonna be a long hot summer...that should light the fuse

Tue, 03/29/2011 - 09:59 | 1112451 oogs66
oogs66's picture

consumer confidence a big miss, and even bigger drop when compared to last month's upwardly revised number.  what will spin be on this?  I'm assuming they will have to pull out the old bad data argument?

Tue, 03/29/2011 - 10:00 | 1112454 praps
praps's picture

The baby boomer wave have all bought their house, bidding up the prices in the process. But that wave is passing and there won't be another one along in the forseeable future. It's downhill now for many more years.

Tue, 03/29/2011 - 10:01 | 1112455 Kickaha
Kickaha's picture

Living in the vicinity of Detroit, I've been in the front lines of this debacle.

It should be readily apparent that what it might cost to build a home is not connected in any way to what an existing home might be worth.  Current home prices are set by supply and demand.

Demand is a function of wealth and income.  The middle class in traditional manufacturing areas has seen its wage levels drop to roughly 33% of what they were five years ago.  They never possessed anything in the way of personal wealth.  And that 33% number does not factor in those unfortunates who are unemployed and out of UC benefits.

Non-manufacturing areas have been deluding themselves while laughing at the rust belt.  What they do is directly dependent on US manufacturing.  They are just beginning to feel the pain.

Supply, of course, is incredibly bloated by foreclosures.

The only areas that seem to holding on would be the heavily agricultural, financial, shipping, and natural resources.  I wonder how long that will remain true.

With interest rates at historical lows (albeit few who really needs a mortgage can qualify for one), this situation can only get worse once when interest rates rise back to normal levels (and beyond).

The only ending I see is the uberrich sweeping in via REITs to scoop up milllions of residential homes for pennies on the dollar, then renting them out to the working class.  In leases we will be required to address them as "m'Lord" and learn how to bow and curtsey.

Here's an interesting exercise:  Review your 2005 property tax bill to obtain the local assessor's opinion as to the value of your home.  Multiply by .33, then run a balance sheet for yourself.  I hope that you, unlike most people, remain solvent today.

Tue, 03/29/2011 - 10:03 | 1112475 I am Jobe
I am Jobe's picture

And they want you to buy homes. WTF, more crap. Start taking away the tax deductions I say. Screw em. After all these years still no idea how to solve this shitz.

Tue, 03/29/2011 - 10:04 | 1112477 gall batter
gall batter's picture

Does anyone here really believe that calling or writing Congressmen and women will have an an effect?  All their strings are attached to Wall Street. 

Tue, 03/29/2011 - 10:34 | 1112637 LFMayor
LFMayor's picture

+1,   be sure to add "voting" to your list and you've got it all sewn up.

Tue, 03/29/2011 - 10:05 | 1112484 hedgeless_horseman
hedgeless_horseman's picture

I hate percent change graphs.  To me, they generally indicate deception.

Tue, 03/29/2011 - 10:07 | 1112485 Seasmoke
Seasmoke's picture

it snowed somewhere in January

Tue, 03/29/2011 - 10:20 | 1112551 cdskiller
cdskiller's picture

Recovery? We don't need no stinking recovery. We already positioned for the wipeout, you stupid, pinche gringo! Nothing will be done to us. Nothing. When your money evaporates, it recondenses in our tanks. When you lose your job, it means more profit for us. You will need an army to take us on. Where is your army? Oh, yes. Doing stupid things to look tough and save political face and protect the interests of the oil companies while we are squeezing your balls until they are tinier than the tiny little pelotas of Barry Bonds, and there is nothing you can do about it but scream and lick our boots clean.

Tue, 03/29/2011 - 10:22 | 1112564 cxl9
cxl9's picture

Curious choice of words. Why is the ongoing process of house prices resetting to sensible levels considered "atrocious"? Real-estate was in a huge bubble. The bubble is now deflating. As someone who is sitting on the sidelines with a little cash ready to invest in the U.S. real-estate market, I don't greet this news as atrocious at all. There are two sides to every transaction: bad for the seller might be good for the buyer.

Tue, 03/29/2011 - 10:47 | 1112691 Kickaha
Kickaha's picture

True, on a micro level.

On a policy level, there are other concerns.

There has been massive mis-allocation of our nation's wealth as a direct result of governmental policies that played into the natural greed and mendacity of both businesses and homeowners.  We have built far more homes than we have homeowners that can afford to pay for them.  The result is 13% of the nation's housing stock sitting vacant.  In the North, those vacant, unheated homes, are quickly becoming riddled with mold.  In the South, its termites.   A lot of them are severely trashed by the exiting foreclosed homeowner.  If they remain vacant for a couple of years, you might as well bulldoze them.  It was dumb to build this excess housing stock.  It is even dumber to let it rot to hell because some MBS holders refuse to take a haircut.  Our policy makers are like those dairy farmers who used to pour milk down the sewer if prices were too low.  Instead, we are pouring houses down the sewer.


Tue, 03/29/2011 - 10:26 | 1112593 baby_BLYTHE
baby_BLYTHE's picture

Interesting to see so many more bullish people up on ZH.

A year ago everyone was screaming for this "Double-Dip".

Bernanke: "Winning"

I guess I can be thankful the worst is behind.

I don't plan on selling any Gold. I still believe it is impossible to print all this money and not destroy your currency.

6,000 years of history is against the FED

Tue, 03/29/2011 - 10:31 | 1112620 Don Birnam
Don Birnam's picture


Tue, 03/29/2011 - 11:25 | 1112867 Temporalist
Temporalist's picture

I saw this new Schiff vid, talking about moving operations to Carib and why (starts @ about 5:00), and thought of you:

Tue, 03/29/2011 - 12:09 | 1113057 baby_BLYTHE
baby_BLYTHE's picture

Thought of me, eh? That's sweet ;)

I contributed to both Ron Paul's money bomb in 2008 and also did with Schiff in 2010.

Peter is just a politican to me now. Very glad for his successes.

Ron Paul I am starting to lose hope. He has one more chance this election season, as I cannot see any other GOP frontrunner that can beat Obama.

Tue, 03/29/2011 - 10:38 | 1112657 bankonzhongguo
bankonzhongguo's picture

The banks will be the new landlords.

Tue, 03/29/2011 - 10:41 | 1112667 Fearless Rick
Fearless Rick's picture

Something nobody seems to want to report: Nationwide, residential vacancy rates are at 13%.

By state, Maine registered the highest rate of vacancies at 22.8 percent. It was followed by Vermont (20.5 percent), Florida (17.5 percent), Arizona (16.3 percent) and Alaska (15.9 percent).

Read more:

Don't know where that link came from, but, anyhow, some counties in Florida are showing 40 -50% vacancy rates. Nice and quiet, if that's your thing. Amazing when you think about Florida, though, roughly 1 in 6 homes are vacant. That a lot of inventory. Bankers, now proven to be the worst business managers in the history of the world, could have done themselves a favor by writing down mortgages by 50% and keeping people in their homes, albeit at a lower payment, but still paying something. Half a loaf better than one at all? Bankers apparently never heard or believed that.

Tue, 03/29/2011 - 10:45 | 1112674 Fearless Rick
Fearless Rick's picture

So, basically, go ahead, kick me out of my house. I'll find one cheaper and better just a few blocks away. Rinse, repeat ad infinitum.

Residential real estate has another 30-40% decline from here. The worst is still ahead.

Tue, 03/29/2011 - 10:43 | 1112678 treemagnet
treemagnet's picture

The wealth effect is totally working for me - I might even pop for bacon on my burger for lunch.

Tue, 03/29/2011 - 10:56 | 1112741 bugs_
bugs_'s picture

keep talking about the double dip.  it makes people feel like at least there was a party even though they weren't invited.

Tue, 03/29/2011 - 11:21 | 1112850 Temporalist
Temporalist's picture

No big deal.  That is just the "housing market recession" which is it's own special event wholly unrelated and uneffected by all other possible factors that may normally seem related but of course can't be because the markets are going up so all else is good.  People are still buying iPads and iPhones after all right?

Tue, 03/29/2011 - 11:23 | 1112865 digalert
digalert's picture

But Jim buybuybuy Cramer said the bottom was June 2009.

Tue, 03/29/2011 - 11:26 | 1112884 Temporalist
Temporalist's picture

It was a bottom...but the bottom then dropped out to make a new bottom.


I'd like to dedicate this Spinal Tap song to The Bernank:

Tue, 03/29/2011 - 11:43 | 1112961 Truthiness
Truthiness's picture

Just finished John Mauldin's "Endgame" - definitely worth reading as it succinctly ties together many of the major themes here on ZH pertaining to the debt binge. The questions still remains, however, what shall come to pass? The world kinda just keeps on truckin' no matter what happens, so sometimes I wonder if the uber-freaky-bearishness does any of us any good...I find myself sucked into this mentality as much as anyone else, for all the same reasons, but then lament that it's likely not a great allocation of my time, talent or resources. In other words, ok, yes, maybe the world is going to hell in a handbasket. Now what do I do?

Tue, 03/29/2011 - 12:53 | 1113244 subqtaneous
subqtaneous's picture

You acknowledge that for the next, probably, ten years, things are going to continue to slowly deteriorate.  To what degree is anyone's guess.  Things are bad and will only get worse, so start looking for ways to create value in yourself so you can survive in this environment.  It's completely up to you, self-sufficiency is imperative.  It's very easy to become a complete nihilist about the world now.  The irony is that for many years of supposed good economic times being so was in vogue, but now that there is good reason to have the inclination, it's the surest means of self defeat.



Tue, 03/29/2011 - 14:50 | 1113726 Truthiness
Truthiness's picture

so so so so true. thanks for the thoughtful response. 

Tue, 03/29/2011 - 12:38 | 1113190 Milton Waddams
Milton Waddams's picture

"Greenspan said the economy will continue to erode until there is a stabilization of U.S. housing prices."

"High oil prices are dragging on the economy, but the fact that they haven't done more damage shows its resiliency."

"It's a burden now," Greenspan said. He added that it's "quite remarkable" that the U.S. economy is "able to do reasonably well" with oil prices near historic highs.

"Crude oil futures hit above $95 a barrel on Thursday and went above $100 in early January."

February 2008

Tue, 03/29/2011 - 12:48 | 1113231 franzpick
franzpick's picture

Clueless and as cornered as Ben may appear, I can't help but think that his smiley sneer may reveal some entirely different exit plan, such as running the markets as high as possible and then, when some trigger event starts the stampede from stocks, close the markets indefinitely.

Then set up an equity collateral lending and exchange facility, the corrupt details of which Ben&Co can surely provide.

Like Embalma's 'deficit-cutting' trial-balloon several months ago for his federal employee supporters: after having run federal salaries to record heights and numbers, at record rates, over several years, he proposes to freeze the government employee salaries.

In general, deficits and unpayable debt have gone so far out of bounds as to require game-changing plans; wrong as they are about theory, those responsible know the realities, and my guess is they have long planned to move the goal posts by moving the games to a new playing field.

Not concerned with details of QE3 vs. inflation and rate increases, just how badly the financial leaders have acted, how much more desparate are the current economics, and how much more bizarre their next moves are likely to be.

Tue, 03/29/2011 - 18:51 | 1114807 ncdirtdigger
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Why do they make the CAPTCHA math questions so hard?

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