July Case Shiller Beats And Misses At The Same Time

Tyler Durden's picture

Some time ago, before China's hard landing was virtually assured (see Iron Ore prices), there was a period when its data was a veritable cornucopia of Schrodingerian ambivalence, with various economic indicators representing either growth or contraction at the same time. It appears that the modified wave-particle duality has just shifted to the US, whose housing segment is the latest patient of wave function collapse as the July Case Shiller index printed both a beat and a miss at the same time. The Top 20 composite index beat in the NSA Year over Year price change, which was +1.2%, on expectations of +1.05%, and up from a revised 0.59. However, it missed in the sequential Top 20 Composite price change, which printed at 0.44%, below expectations and half off the June price increase of 0.91%. In fact, as the chart below shows, the July increase was now the slowest sequential increase in the past 5 months, and at this rate, the August, or September data at the latest, will show a sequential decline in prices, as the euphoria from the Rent-to-REO fades, and as the massively pent up foreclosure inventory is finally forced to come to market and drag prices far below where the currently artificially propped up market "clears" (read Foreclosure Stuffing).

And from the report:

“Home prices increased again in July,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “All 20 cities and both Composites were up on the month for the third time in a row. Even better, 16 of the 20 cities and both Composites rose over the last year. Atlanta remains the weakest city but managed to cut the annual loss to just under 10%.


“Digging into the numbers, 15 cities and both Composites had stronger annual returns in July’s report. New York was the only city with a worse 12-month decline in July than June. Dallas and Washington D.C. saw no change in their annual rates. Cleveland and Detroit saw annual rates decelerate in July versus June, although they remain positive for both cities.


“The news on home prices in this report confirm recent good news about housing. Single family housing starts are well ahead of last year’s pace, existing home sales are up, the inventory of homes for sale is down and foreclosure activity is slowing. All in all, we are more optimistic about housing. Upbeat trends continue. For the third time in a row, all 20 cities and both Composites had monthly gains. Stronger housing numbers are a positive factor for other measures including consumer confidence.


“Among the cities, Miami and Phoenix are both well off their bottoms with positive monthly gains since the end of 2011. Many of the markets we follow have seen some decent recovery from their respective lows – San Francisco up 20.4%, Detroit up 19.7%, Phoenix up 17.0% and Minneapolis up 16.5%, to name the top few. These were some of the markets that were hit the hardest when the housing bubble burst in 2006. The 10-City has increased 7.4% and the 20-City 7.8% since their recent lows. The positive news in both the monthly and annual rates of change in home prices over the past few months signals a possible recovery in the housing market.”

Remember: Bernanke needs to demonstrate an improvement in the housing market in order to justify his latest infinite monetary easing escapade, whose only real goal of course is to push the stock market higher. If and when the latest dead cat bounce, 4th in a row, ends, some, not Chuck Schumer, may once again question the prudence of unleashing infinite fiat in order to artificially prop up home (and stock) prices which are becoming increasingly unaffordable to the bulk of the population, but certainly not to the offshore billionaires who use the NAR's anti-money laundering exemption to, well, launder money.

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GetZeeGold's picture



Sorta halfassed?


Eireann go Brach's picture

NAR=Nasty Arrogant Rats! or Nonsensical Asshole Rodents!

redpill's picture

Foreclosure inventory has been steadily shrinking over the last year, as banks would rather resolve delinquincy with a short sale.  It doesn't require all that pesky chain-of-title paperwork (that they've realized they don't have), it keeps the house in better shape (fewer Sharpie parties), and it's far more politically popular.  Short sales will continue to exert downward pressure on prices, but the year-over-year rise is a nice dab of neosporin on the giant festering wound known as the housing market.

Arnold Ziffel's picture

My cousin is a RE lawyer who is licking his lips when all those Title closing defects start popping up 5- 10 years from now when the present buyers sell -- or at least, try to sell.


He literally made his fortune in the late 1980s after that Housing Bubble blew up and then again in the early 1990s when the defects showed up when people could not sell due to the defect....title closing defects galore since the title companies were closing like hotcakes w/o checking them properly. In the early 1990s the defects began to show up and titles were all messed up.


One study (I think from Texas) shows over 80% of title clsoings between 2004 and 2008 has a major defect. This RE mess will last for decades. Prices will continue downward due to all these problems as well as when rates revert to the norm of 7-10%.

Id fight Gandhi's picture

Title insurance was largely a scam for years. Now it'll all come together for all these problems.

Bailouts for all the insurers who thought they'd make a quick buck,eh?

hidingfromhelis's picture

There's a misconception that because the title insurer will insure it must mean buyers are getting clear title. Fraudulent documents still cloud title...period.  Having title insurance theoretically means that the insurer will defend title for you. This is assuming that they haven't found a way to exclude this from coverage. Has anyone else noticed how the list of exclusions on title insurance policies keeps growing? What happens when there are scores of challenges to title? How many insurers will simply close their doors? Sure, there's the American Land Title Association umbrella, but if any significant numbers of transactions are deemed fraudulent or invalid, then all bets are off.  Having title insurance only means that someone might attempt to defend your title.

Title insurers are simply skimming their vig when times are relatively normal.  Sure, once in a while, they pay on a policy.  When things really go bad and it's determined that 50%+ of all titles are clouded, they're closing their doors and walking away.  Same goes for ALTA (American Land Title Association,) the umbrella organization or trade association.  When TSHTF, the whole mess will be nationalized.  

I think it will start with courts ignoring law and precedent, but when instances become too commonplace, efforts will step up to portray it as minor paperwork mistakes as in the "robosigning" debacle.  Large financial institutions are still getting a get out of jail free card for falsified or nonexistent paperwork in foreclosures.  Extend and pretend FTW!

Win or lose, I expect your cousin to be very busy.

kaiserhoff's picture

And when the 30 year snaps back to 10%, what will that crap be worth?

Having the same problem valuing farm land.  It's never easy, but with ZIRP and commodity prices going nuts, it's damn near impossible.

Biosci's picture

If the Fed buys up the bad MBS at par, why bother foreclosing? This could really fuck up the market: ignore the freeloaders and let the market discover price for the rest of the inventory. With pricing set at the margin, and no shadow inventory, Ben gets exactly what he wants.

LawsofPhysics's picture

Government/central planning fuck up a "free" market?!?!? -  "Shocker!"

redpill's picture

If the 30 year snaps back to 10% (where it hasn't been for 20+ years) we're going to have WAYY bigger problems than whether people can afford a new mortgage, considering our government would go bankrupt overnight.

Biosci's picture

Why would it go bankrupt?  The Treasury gets back all the interest it pays to the Fed, who will own all the duration by then anyway.  And because of that, the 30Y will never see 10% again anyway.  Whether you can buy a slice of bread with your hourly wage in dollars is another story, of course.

Never underestimate the bastards' ability to just muddle through.  Just don't let 'em grind you down.

ptoemmes's picture

Yeah, CNBC WEB "commented" on the miss...Bloomberg WEB headlined the "beat".

And the stock market (futures), the former supposedly forward looking discount mechanism (ahh the good ole days), reacts positively - to 60 DAY OLD DATA.

OK - I feel better now.






Stoploss's picture

Case Schrodinger Top 20 Psycho Set.

q99x2's picture

Japan's economy, the best of FED cloning possibilities, saw housing leak lower for 25 years and then they had the nucliear disaster which in some cases actually caused home prices to hit bottom in the Fukushima Prefecture. They believe the value of housing there now has a 85% reliable probability factor associated with it.

In addition, home prices in Fukushima should maintain their value, + or - 2% for the next 250,000 years.

fightthepower's picture

Fuck you Bernanke!

firstdivision's picture

Who cares about home prices, when can I place my order for an iPad4 and iPhone6?

JohnKozac's picture

Zero down loans are very prevalent. Handing houses to people who cannot afford them, 40% of whom will default, does not bode well for the housing market for the next decade (or two or maybe th enext Century).

Until 'discipline' is brought back into RE (such as 20% down and a real job or assets), the numbers shwoing any 'improvement' border on supernatural mythology.

You can still buy a $400,000 house for $500 down. Nothing has changed.

aheady's picture

Not sure where you are, but on the coast of Virginia - that is absolutely not happening. I work in the industry (office manager not a realtor) and watch contract after contract fall through due to financing issues... NO ONE can get a loan. The homes just sit there, piling up.

redpill's picture

Can you show me where that loan program is?  I have plenty of contacts in the business and haven't heard of anything like that for years.

pursueliberty's picture

There is a program, but it has income limits along with population density requirements.


It is called a USDA rural development loan and the home must be in a town of less than a certain size to meet the population requirements.  It is easy to find out if they are available.  The town I am in shrunk a few years ago and they became available.  You can now get 100% financing.  The greatest thing about the loans is the PMI on a 30 yr is .03%.  There is no limit on the homes price as they are kept in check by income restrictions.  I've been keeping my income adjusted to stay under the number required, which varies from state to state and number of members in household.  My wife sells loads of houses using to buyers using this loan.  It has all but replaced FHA loans which have seen the fees rise quite a bit in the last couple years.  You can now do a 5% conventional with lower PMI and lower up front pmi.


I don't know of another 0 down program, and I would.  On investment properties I'm needing 20-25% and seeing rates in the low 3's-mid 4's on rates for 15 years with outstanding credit.  These are 3 or 5 year balloons.  It is really hard to find a fixed 15 year on investment/commercial property.

Arnold Ziffel's picture

I don't know where John lives but I visted my son in Texas and you can also hear them advertise "zero down houses" non-stop on the radio.


Same in Arizona and parts of Nevada when I was driving through.

As some one said, "Nothing has changed."



Snakeeyes's picture

But it is just a summer wind. Wait for the winter and the coming largest increase in taxes in US history that will fry housing's goose.


IridiumRebel's picture

i am selling my house. We have totally redone it and currently priced fairly well, BUT NO ONE HAS EVEN LOOKED AT IT IN WEEKS. I can't even get people just to show it to and that is across the county according to my realtor. This is shit. No one is buying houses cuz they do not have the money and they cannot get a loan. 

pursueliberty's picture

Not a problem in most of Arkansas.  Loans are no more difficult to get than they've ever been if you have a job/verifiable income for the last two years and a credit score of 640.  If you don't have those two you probably shouldn't be buying a house anyway. 

If the rental market is decent where you are at, which it should be if there really are no buyers with money or the ability to buy, I would rent it.  Rental rates in my area are at all time highs with further upward pressure.  I only have a few, but I can get a good renter in less than two weeks.  I've got a house that rented 8 years ago for $450, now for $850, next renter will pay $900.  Keep it on the market and rent it out with a notice to tenant that they will have 30 days from contract to vacate.

aheady's picture

I agree with the rental activity for sure... Up, up and away. We put people into rentals here within a day or two usually, no matter the price. And they remain on the market... not selling but at least paying the owner's mortgage, with a little to spare.

IridiumRebel's picture

we are considering this option


we are not in any hurry


but I believe that we are about to take the next "leg down"


I do not believe this recovery shit for one minute

MachoMan's picture

Apparently it isn't priced very well...  I suggest lowering the price until you find a buyer.

Arnold Ziffel's picture

I understand what you mean. There was a house down the way selling for $42 psf for 181 days before someone finally bought it. I looked at for fun and it was not in bad shape.

This whole thing is a real mess.

ebworthen's picture

Big cities with lots of government employees or corporate/attorney leeches still floating on QE; most of the housing market still in the shitter.

Of course all you hear from the MSM is recovery and it's 1984 all over again.

1984 indeed, in the Orwellian sense.

caimen garou's picture

same thing only different,fubar alert,fubar alert!

SmoothCoolSmoke's picture

On CNBC.com.....It's all good man.

Jumbotron's picture

Bouncing up and down along the bottom.....until....well....like this FedEx Plane.





Dkizzle49855's picture

I read ZH everyday, but here is my story.  Getting the hell of out CA before it implodes and moving to Texas and sold my house in So Cal in 36 hours.  The place sold for over asking price (bidding war between 2 families).  It sold for $50K more than the same house across the street sold 10 months earlier.  I would NEVER have believed it would sell that fast.  I did find a unicorn with great credit and put 50% down to buy it.  Booyah!!!!!!!!!!!!!

AynRandFan's picture


I bet that was one helluva big sigh of relief.

AynRandFan's picture

From now on, good news isn't bad and bad news isn't good anymore.  QE Infinity changed all that.

On a long term chart, the Case-Shiller number today is insignificant.  We are sitting back on the long term trend line, meaning that the entire Greenspan-Barney Frank-Chris Dodd housing bubble has been erased.

jim249's picture

The Wall Street firms that caused this mess are now out buying in droves. 30% of all sales are cash buyers. The liitle people that had a chance to buy a home are now being priced out of the market.



Arnold Ziffel's picture

Good! They can have all of them + the 13 million in shadow inventory.