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Housing Recovery? Case Shiller Home Prices Tumble Most In 10 Months
The 0.18% month-over-month decline in Case Shiller home price index is the biggest since July 2014 which confirms the David Blitzer's view that "over the next two years or so, the rate of home price increases is more likely to slow than to accelerate." His biggest fear is that "first time homebuyers are the weak spot in the market," adding that prices are increasing about twice as fast as inflation or wages. Moreover, other housing measures are less robust - housing starts are only at about 1.2 million units annually, and only about half of total starts are single family homes. Sales of new homes are low compared to sales of existing homes.
From the report:
The 10-City Composite and National indices showed slightly higher year-over-year gains while the 20-City Composite had marginally lower year-over-year gains when compared to last month. The 10-City Composite gained 4.7% year-over-year, while the 20-City Composite gained 4.9% year-over-year. The S&P/Case-Shiller U.S. National Home Price Index, covering all nine U.S. census divisions, recorded a 4.4% annual increase in May 2015 versus a 4.3% increase in April 2015.
Denver, San Francisco, and Dallas reported the highest year-over-year gains among the 20 cities with price increases of 10.0%, 9.7% and 8.4%, respectively. Ten cities reported greater price increases in the year ended May 2015 over the year ended April 2015. New York and Phoenix reported six consecutive months of increases in their year-over-year returns since November 2014. Year-over-year returns in New York increased from 1.3% in November 2014 to 3.0% in May 2015, and Phoenix climbed from 2.0% to 3.8% in the same period.
Month-over-Month
Before seasonal adjustment, in May the National index, 10-City Composite and 20-City Composite all posted a gain of 1.1% month-over-month. After seasonal adjustment, the National index was unchanged; the 10-City and 20-City Composites were both down 0.2% month-over-month. All 20 cities reported increases in May before seasonal adjustment; after seasonal adjustment, 10 were down, eight were up, and two were unchanged.
The commentary was, in typical Case Shiller style, mixed with the usual warning that the current pace of price appreciation is unsustainable:
“As home prices continue rising, they are sending more upbeat signals than other housing market indicators,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Nationally, single family home price increases have settled into a steady 4%-5% annual pace following the double-digit bubbly pattern of 2013. Over the next two years or so, the rate of home price increases is more likely to slow than to accelerate. Prices are increasing about twice as fast as inflation or wages. Moreover, other housing measures are less robust. Housing starts are only at about 1.2 million units annually, and only about half of total starts are single family homes. Sales of new homes are low compared to sales of existing homes.
“First time homebuyers are the weak spot in the market. First time buyers provide the demand and liquidity that supports trading up by current home owners. Without a boost in first timers, there is less housing market activity, fewer existing homes being put on the market, and more worry about inventory. Research at the Atlanta Federal Reserve Bank argues that one should not blame millennials for the absence of first time buyers. The age distribution of first time buyers has not changed much since 2000; if anything, the median age has dropped slightly. Other research at the New York Fed points to the size of mortgage down payments as a key factor. The difference between a 5% and 20%
Visually:
More details on the monthly move:
... and the Year over Year:
Breakdown shows even high flyer San Francisco saw a MoM drop (seasonally adjusted)...
As David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices explains:
“Nationally, single family home price increases have settled into a steady 4%-5% annual pace following the double-digit bubbly pattern of 2013. Over the next two years or so, the rate of home price increases is more likely to slow than to accelerate. Prices are increasing about twice as fast as inflation or wages. Moreover, other housing measures are less robust. Housing starts are only at about 1.2 million units annually, and only about half of total starts are single family homes. Sales of new homes are low compared to sales of existing homes.
And more importantly:
“First time homebuyers are the weak spot in the market. First time buyers provide the demand and liquidity that supports trading up by current home owners. Without a boost in first timers, there is less housing market activity, fewer existing homes being put on the market, and more worry about inventory. Research at the Atlanta Federal Reserve Bank argues that one should not blame millennials for the absence of first time buyers. The age distribution of first time buyers has not changed much since 2000; if anything, the median age has dropped slightly. Other research at the New York Fed points to the size of mortgage down payments as a key factor. The difference between a 5% and 20% down payment, particularly for people who currently rent, has a huge impact on buyers’ willingness to buy a home. Mortgage rates are far less important to first time buyers than down payments.”
But apart from that, it's time to raise rates, make housing less affordable than it already is, and show just how strong the economy really is.
Charts: Bloomberg
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2001 to 2008 = 7 years
2008-2015 = 7 years
Capiche?
Christine Lagarde: Seven years..
https://www.youtube.com/watch?v=QYmViPTndxw
Next up the October surprise.
Yeah, it will be a surprise cause
It will happen in August!
And how's that SOARING futures thing working out for you mooks??
http://www.zerohedge.com/news/2015-07-28/futures-soar-hope-central-plann...
What I say..
Moar, ve need moar!
How long until I can dump some metals and buy a home with some acreage?
Looks like half of that equation is starting to move in the right direction, leading into the autumn where many are predicting a major market turn.
I really would like to offer a definitive answer to your question, but, thaose details are obviously in the hands of people more "powerful" than yours truly.
I can tell you this: If you are really interested in buying some acreage (with or without a house or structure), it can be done without letting go of your PMs.
On the one hand, you could use the PMs as collateral. Find a rich uncle or friend who has cash, hand over the PMs for safe keeping, in exchange for a determined amount of payback on a monthly basis. PMs will retain their value to varying degree, so it can be done. In fact, it used to be the preferred method, back in the Middle Ages, but, I digress.
In today's modern world, you can get money from credit cards at 0% interest. I did, and used those funds to purchase 5.7 acres of raw land with woods and a stream (no structure). I also did not use a bank; it was a private transaction (well, a real estate broker, two lawyers and the principals - buyer and seller).
Seller granted a small mortgage at 5% over 2 years. The remainder was cash. I am in the process of paying down the CCs I used to finance my purchase. Best decision I've made in a long time.
To paraphrase Harvey Keitel: "I love the smell of burning fiat at 0% in the morning. Smells like victory."
Just do it.
Fucking LOL Harvey Keitel!
Were you watching Bad Luitenant on a meth binge?
Thank you. I was trying to remember what she said in that speech recently but couldn't find the video.
No worries dude.
She got spooky there.
"But apart from that, it's time to raise rates, make housing less affordable than it already is, and show just how strong the economy really is."
I don't understand this statement. The reason housing prices are high is because of ZIRP.
And institutional investors seeking better returns. Many single-family home sales in my area are closed in cash.
But that cash is still being BORROWED! All these REITs and specuvestors are financing based on totally unattainable cap rates. The smart money has already gotten out as the professional flippers have moved to the sidelines and the REITs have sold off shares at top dollar to knife catchers.
Housing Bubble 2.0. Second verse same as the first...
Different this next down-turn, imho. International shoppers will be slim and none. Government will be buying, through HUD, to move indigenous populous out the white suburbs. All a simple formula for crashing housing prices and abandoned houses on every block. Detroit here we come... If martial law is declared then you will have a lot of empty housing with military bases housing the rounded up, re-education, group.
The average Joe Six-Pack, when he buys a house, he shops monthly payments-not sales price. So when interests rates go up, that monthly nut buys less house. If you want to sell Joe a house you would have to drop the sales price to get back to his "affordable" payment.
As a slumlord, the best time to buy is when rates head north, sales prices will drop and then when rates eventually come down refinance to the lower payment. Easy money.
Your two statements are contradictory. When interest rates go up, sales price drops, which means payments decline. As long as price declines are greater than interest rate rises, it's better for the buyer. It also reduces speculative investors seeking rent, which will push prices down further.
will be spun as "a tad softer than expected ", i.e., as a temporary aberration.
A transitory, double seasonally adjusted soft patch?
...and "contained to subprime."
I think they will be able to stretch it out to December or early 2016, unless they start a war first
So, when exactly did Tyler take home prices as a proxy for the strength of the economy? Every other post is about how housing is in bubble territory.
Put me down for using data to create a narrative, not fit a narrative.
Larry Yun was consulted.
We should have one or two more rallies before this bitch implodes.....it's all on their occult schedule.
Young people aren't having kids, why the fuck buy a house if you don't have a family? Why aren't we having kids? Many people are simply infertile from years of MSG, fluoride, Corn syrup, vaccination, etc.
Others just see it as an inconvenience.
Finding a non-modernized woman is a rarity, wackos galore.
The whole feminist movement has destroyed women's ability to view the world in a real way. On the other hand men have been taught that being a child and rooting for your favorite sports team is the way to be.
It's hard for a man and a woman to have a real relationship because the roles/responsibilities have been artificially merged, basically men and women are now just roommates and are generally together because "hey we get along most of the time and we couldn't live this lifestyle without each other's income."
If the FED raises rates, house prices will come down and so will the stock market.
MSN money told me that Hampton real-estate is getting cheaper. My bank told me Im approved for a loan, yippee!
In June, housing prices were higher than 2006, and inventory at an all time low. Word is, this month the housing market has crashed. Interestingly enough, more new real estate agents have been getting into the business this year than ever before.
It's called herd mentality. If you choose to go down that dusty trail, try to place yourself in the middle of the herd as the ones on the edges will be eaten alive when it all eventually rolls over. Many of them will have to go back to selling used cars. At least that's how it works on The Animal Planet.
These new agents would have to improve their job skills and personal behavior in order to sell used cars. These are the dregs of the dregs of society. Learning to speak english would also help.
That's because there's nothing else to do cuz of the recovery.
The 14 Real Estate Boom cycle is about to turn. It's the normal 12-14 year up-down cycle.
Housing is being bought on the margin by large govt promoted orgs to create false price discovery; same as the stock market. Remember the arm twisting FASB received? It's all an illusion to keep banks solvent and in business to suck the wealth from the world.