Case Shiller Index Rises At Fastest Annual Pace Since 2006; Detroit Home Prices Soaring 17.3%

Tyler Durden's picture

Moments ago the October Case Shiller home price index was released which came largely as expected: the seasonally adjusted number rose by 1.05% in the month, which despite the collapse in mortgage applications, shows that cash still rules everything, as average home prices across the Composite 20 cities increased at a 13.63% annual clip, the highest since February 2006. Both were a fraction higher than the expected 0.95% and 13.50% M/M and Y/Y increases. On the more relevant NSA basis (according to the authors) however, the October increase was 0.18%, the lowest since January and an indication that the institutional "all cash" buying wave is finally fading.

Indeed, as can be seen on the chart below, the actual home price gains over the past three months have plateaued and absent another major push in early 2014 facilitating Wall Street's purchases of US real estate, it is very likely that this chart will once again resume trending lower.

And to show specifically just what the Case Shiller index tracks, here - once again - is an update on the housing market of bankrupt Detroit. In October prices rose 0.9% for the 8th consecutive monthly increase, and rose 17.3% from a year earlier. All is obviously well.

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TeamDepends's picture

Every new purchaser of a home in Detroit will receive a complimentary pit bull.

SnobGobbler's picture

....whether they want a pit or not, man those fuckers are EVERYWHERE!

i used to carry a pistol for the thugs, now its those damn strays

greatbeard's picture

>> i used to carry a pistol for the thugs

I did it for both but the pit bulls were high on the target list.



snodgrass's picture

When homes are selling for $1 each, it's easy to get a 17.3% increase in price.

johnconnor's picture

you could buy a house for the price of a DVD in 2008, with this improvement you can buy one for the price of a blur ray player... FORWARD!!

fonzannoon's picture

I know several people who grew up just outside Detroit. They still live there. They have been buying up plots of land there on the (very) cheap. It actually seems like a decent investment. 

Can't you just feel that Uncle Warren announcement that he has purchased a shitload of property there and will be relocating some of his business there? 

slotmouth's picture

From what I here, the quicken loans guy has been dumping a massive amount of his fortune into revitalizing Detroit.

fonzannoon's picture

I honestly don't get the ZH bashing on Detroit. I mean I'm not saying it's Beverly Hills. But I thought the idea was to buy something when no one else wanted it. 

tarsubil's picture

Hmmm, Detroit has already largely failed. I don't think the time to buy stock is when the company is no longer a going concern.

NoDebt's picture

It's government has failed.  The city is still there.  Some of it anyway.

It's a long bet on whether they will stage a comeback sufficient to start raising land/housing value while not taxing everything into oblivion in the process.  Probably a good bet, but one I would still put in the "speculative" category.  You don't want to bet the kids' college money on that one.

tarsubil's picture

No. It is much worse. The society has failed. The corrupt government failing would be a good thing but it is still there. Families, culture, morality, those are the things that have failed. Detroit might as well be radioactive. Meh, that's just my humble opinion. I don't see how you overturn generations of societal rot with new investments.

NoDebt's picture

Slowly.  That's why it's a long bet on Detroit real estate.  It could very well get worse, but in a world were Russia now tells the US it should embrace more free market principles, I believe anything is possible.

tarsubil's picture

Russia is a good comparison but it has a lot of natural resources. I just don't see what Detroit has to offer.

PrecipiceWatching's picture


Specifically, what private sector REAL industries/businesses does he plan on creating or attracting to provide the actual, meaningful engine of such revitalization?


Or is he just going to build some eyecandy cool condos and eateries for know-nothing young punks and fags who think living in constant danger is somehow "hip" and sophisticated.

Clowns on Acid's picture

The Arabs in Dearborn will buy up Detroit and use it as a asylum city for mass immigration from Lebanon, Syria, Iraq, etc....

The game is "ON" in the US, build up your victim base (Hispanic, Black, Asian, etc..) then take advantage of Affirmative Action laws (which includes Immigration law)... and get a piece of that 4 $ Trillion / year honey pot budget of the USSA. Anyone fucks with you call them a racist. Seems like a good buisness plan.  

NoDebt's picture

These numbers are nearly meaningless.  High end homes are a much larger share of the market than they used to be (mainly because the lower end shrank).  What do you think is going to happen to "average" numbers in a situation like that?

It takes a lot of little $100K shacks (flat to down in value) to move the needle compared to one $40MM mega-home (up from $25MM same time last year).

NihilistZero's picture

Even more salient than the high end sales is the last gasp of greater fools pushing the median higher on incredibly low volume.  This is mirroring 2006-07 where Housing Bubble 1.0 had its last gasp.  Expect a flat 2014 with near zero volume, with the next crash followed by institutional investors running for the exits in 2015.  FED won't care as the losses will be to private equity as opposed to the member banks.  Ben did an AMAZING job at cleaning their books.

NoDebt's picture

You had me at "low volume."  That's sort of the hallmark of every asset right now.  If it wasn't for HFT shops stock exchange traded volumes would look almost exactly like housing volumes- still flat on their back.

Chief_Illiniwek's picture

Let me get this straight:  As 2013 ends, I should sell my precious metals and buy Detroit real estate?


Living in Colorado, this vision HAS to be the result of second-hand "smoke"...

slotmouth's picture

My inlaws who live in Detroit have been buying up houses in Detroit.  There were homeless guys and a pack of stray dogs eating out of the same dumpster less than a block away. There were abandoned warehouses and shome really shady people around, and yet the house went for 150k.  Two years ago you could have bought the same house for less than 20k.  They originally wanted to buy a house in midtown but were priced out.  I know a lot of hipsters who have moved from the suburbs back to Detroit, and almost every single person has been a victim of a violent crime.  In case you are wondering why Detroit is abandoned, I suggest you brush up on your history of race riots.

dick cheneys ghost's picture

$10 per gallon gas is about the only thing that can help Detroit and other dead, midwestern cities......... that is if we survive the implosion of a credit based monetary system first

tarsubil's picture

And think about it. The hipsters most likely will not have kids or just one. Their jobs will not be in a real trade. They don't have any clue on how to defend themselves. How in the world is that bubble going to survive the wall of swords that is reality?

q99x2's picture

We are entering a Maunder Minimum. Detroit will be under 150 feet of ice in a few years. Al Gore's bucket of globalist climatologists are still stuck in the ice (as of last night) They were on a mission to prove the earth is heating up so the globalists could reign tyranny in the form of carbon taxes.

Clowns on Acid's picture

qman - you are a funny bastid...

Colonel Klink's picture

Both those charts look like they're rolling over.

Much like our president does.  Reggie call your office!

evernewecon's picture




How combining taxpayer financed

inventory manipulation (aside from the carrying

of dead weight inventory with free reserves

at the expense of everyone else's interest

income and the purchasing of mortgage

backed securities not at market value) 

with an index that weighs more heavily,

during the withholding of distressed inventory,

of properties purchased post-crash, including

those purchased from adversity by the 

very bankers who created the adversity, which

is of course part and parcel to a 

familiar pattern, leads to false impressions.






roadhazard's picture

Whats the draw for a bankrupt city with failing industry. Cheap prices for what.

Professorlocknload's picture

"But I thought the idea was to buy something when no one else wanted it."

 Right on, fonz. When 9 out of 10 are frozen in analysis paralysis, the 1 in 10 will act. 


  Unlike paper, RE is the hedge of the Proles. Maybe 'cause it has the word "real" in it? When the bits, bytes and green ink are gone, bricks and mortar will still be lived in. Just need to look long term.

 Detroit? Well, given the choice, I'd consider Portland O or Austin or maybe San Diego. Can't live on snow and ice.

IREN Colorado's picture

I like Robert Shiller's work. He publishes a fairly good study that is useful when observing the residential home market. I believe this also has relevance when accessing trends for household income, private consumption, overall personal wealth, mobility within income classes, and physical mobility across regions of the country. It is not the final word on whether an economy has “recovered”. It is a data point that must be viewed with other data points to determine broader trends.


It is chilling that our Government is using housing prices, and stock market prices, along with rates of employment to determine how well we are doing as a people. All three of these indicators have been twisted by monetary policy, or data that is simply fabricated from whole cloth, to the point where they really mean nothing.



The cautious observer needs to dwell deep into the data to figure out what is really happening and determine who/what/where/when/why  these bastards lie to US like they do.