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No Housing Recovery - Case Shiller Shows 8th Consecutive Month Of House Price Declines

Tyler Durden's picture




 

Little that can be added here. The December Case Shiller came, saw, and shut up all those who keep calling for a home price recovery. The Index printed at 136.71 on expectations of 137.11, with the prior revised to 138.24. The top 20 City composite was down -0.5% on expectations of a 0.35% drop. 18 out of 20 MSAs saw monthly declines in December over November, with just the worst of the worst - Miami and Phoenix - posting a dead cat bounce, rising 0.2% and 0.8% respectively. And granted the data is delayed, but the fact that we have now had 8 consecutive months of home price declines even with mortgage rates persistently at record lows, and the double dip in housing more than obvious, can we finally shut up about a housing bottom? Because as Case Shiller's David Blitzer says: "If anything it looks like we might have reentered a period of decline as we begin 2012.” QED

From the report:

“In terms of prices, the housing market ended 2011 on a very disappointing note,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “With this month’s report we saw all three composite hit new record lows. While we thought we saw some signs of stabilization in the middle of 2011, it appears that neither the economy nor consumer confidence was strong enough to move the market in a positive direction as the year ended.

 

“After a prior three years of accelerated decline, the past two years has been a story of a housing market that is bottoming out but has not yet stabilized. Up until today’s report we had believed the crisis lows for the composites were behind us, with the 10-City Composite originally hitting a low in April 2009 and the 20-City Composite in March 2011. Now it looks like neither was the case, as both hit new record lows in December 2011. The National Composite fell by 3.8% in the fourth quarter alone, and is down 33.8% from its 2nd quarter 2006 peak. It also recorded a new record low.

 

“In general, most of the regions also posted weak data in December. Eighteen of the cities saw average home prices fall in December over November. Seventeen of the cities have seen monthly declines for at least three consecutive months. In addition to both monthly composites, 10 of the cities saw home prices fall by more than 1.0% during the month of December. The pick-up in the economy has simply not been strong enough to keep home prices stabilized. If anything it looks like we might have reentered a period of decline as we begin 2012.”

8 Consecutive Months of Declines:

Long-Term Case-Shiller:

 

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Tue, 02/28/2012 - 10:19 | 2203556 Caviar Emptor
Caviar Emptor's picture

ooofahhh.....gut punch. 

Tue, 02/28/2012 - 10:24 | 2203598 markmotive
markmotive's picture

It's a slow painful death. Still, housing is much cheaper than it was a few years ago.

Mike Maloney on the gold-real estate cycle:

http://www.planbeconomics.com/2011/03/22/gold-vs-real-estate-know-the-cycle/

Tue, 02/28/2012 - 10:28 | 2203611 TruthInSunshine
TruthInSunshine's picture

Expectations of a 0.35% drop were revised down (after the actual release) to expectations of a 0.7% drop, thus making the 0.5% drop an extraordinary upside surprise.

Tue, 02/28/2012 - 10:31 | 2203637 Caviar Emptor
Caviar Emptor's picture

Prices are down 33.8% from their peak in the second quarter of 2006

You're right. That was an upside surprise! Consumers are WAY richer than they thought. 



Tue, 02/28/2012 - 10:38 | 2203669 EscapeKey
EscapeKey's picture

In actuality, it's more like "less poor", but why not go with the corporate media spin.

Tue, 02/28/2012 - 12:18 | 2204145 donsluck
donsluck's picture

Since you need shelter of some kind, I have always argued that rising housing prices equal impoverishment. After all, isn't rising food prices a sign of reduced purchasing power, ie impoverishment?

Tue, 02/28/2012 - 10:35 | 2203654 Mugatu
Mugatu's picture

Question: Why do the banksters get 1% money to buy shitty government bonds that have no collateral backing them, yet the people don't get 1% free money to buy real estate that actually has tangible value.  

Answer: We live in a world where the nebulous and intangible has more value than those assets with real value.

Tue, 02/28/2012 - 12:49 | 2204303 Fukushima Sam
Fukushima Sam's picture

And an investor looks for just such opportunities, where something is temporarily undervalued.  Play your hand accordingly.

Tue, 02/28/2012 - 11:44 | 2203960 I should be working
I should be working's picture

Cheaper than a few years ago is irrelavent.  Tech stocks were very cheap in 2003 relative to 2000, but they still lagged the market for several years.  Cheap relative to a bubble is still expensive historically.

When people stop calling for a bottom in the housing market every few months maybe it will finally bottom.  If we're lucky by 2015.  Even then, housing is a lousy investment.  There is plenty of land in the US and most in places it doesn't make any sense for a house to cost that much more than the price to build it.

Tue, 02/28/2012 - 13:31 | 2204466 markmotive
markmotive's picture

The point is that someone buying a house for the first time today (because everyone either needs to rent or buy...or live in their mom's basement) can get a much better deal than someone buying a few years ago.

Regardless, I would define 'value' in relation to incomes and rents. Not by how much the price has moved.

Tue, 02/28/2012 - 10:29 | 2203626 midtowng
midtowng's picture

So in other words, since the housing market started imploding in 2005, the only bounce we've seen (2009-2010) was when the federal government threw billions of free dollars at it.

Tue, 02/28/2012 - 10:33 | 2203644 WonderDawg
WonderDawg's picture

That is correct.

Tue, 02/28/2012 - 10:40 | 2203677 TuesdayBen
TuesdayBen's picture

Free dollars!  Free!  Free!

Free at last.  Free at last.

Tue, 02/28/2012 - 10:40 | 2203678 EscapeKey
EscapeKey's picture

A perfect example of a Keynesian recovery.

Tue, 02/28/2012 - 11:00 | 2203758 TruthInSunshine
TruthInSunshine's picture

This recovery is looking more & more lower case q-ish...

Tue, 02/28/2012 - 10:44 | 2203689 Gully Foyle
Gully Foyle's picture

Funny on the housing thing. I've looked at a few homes recently. They left the market lower than when they returned. What fucking realtor is advising " Now is the best time to raise the asking price of your house that sat on the market for two years already"?

Tue, 02/28/2012 - 12:12 | 2204113 Woodyg
Woodyg's picture

I was looking at 2 possible properties in the portlnd area - both trailers on 5 acres - looking at low-balling the overpriced property that have sat vacant for at least a year on the market -

When 2 weeks ago both went up in price 35%

More proof the supply -demand curve is a quaint old fashioned relic no longer in effect.

Or maybe proof the banks can't actually sell the foreclosures as they are worth more as an asset on the books than an actual loss.

And if they do sell a bunch of the foreclosures they will be shown to be Bankrupt.

Tue, 02/28/2012 - 12:23 | 2204172 donsluck
donsluck's picture

Oops, we bought in August, cash. Short sale offered at 380K. We offered 385K. 2nd Note holder stopped the sale over their 5K demand. Forclosed. Bought it after forclosure for 350K, saved 30K. The price signal is a point where the bank is in trouble enough to get federal aid, but not so much to be closed and sold to a bigger bank.

Tue, 02/28/2012 - 12:27 | 2204195 CoolBeans
CoolBeans's picture

Interesting observation -- which may explain what I'm seeing around here.

The local realtors post their "daisies and sunshine" sales/under contract reports each week.  Well, you'd think the market was just humming along.  But, if one compares the "under contract" list with those that actually make it to the final sale -- they don't come close to matching up.  Then, weeks and weeks - sometimes months later - these homes show up on the report again -- getting put under contract.  Few make the "sales" report.

So, it would seem the short sales and foreclosure sales have a pretty low success rate.  I'm inclined to think that the ones that do make it to the final sale are the all-cash offers.  But, again - very few as a whole.

Tue, 02/28/2012 - 10:20 | 2203558 transaccountin
transaccountin's picture

Bullish Hopioum!

Besides, as CNBS explained it, its because of Winter!

Tue, 02/28/2012 - 10:22 | 2203582 Conman
Conman's picture

You mean the abnormally warm winter where it barely snowed in most of the heavily populated areas of america? YA! thats it, winter brrrr. no house buying, never mind its already seasonaly adjusted data blame it on the weather!

Tue, 02/28/2012 - 10:23 | 2203591 Caviar Emptor
Caviar Emptor's picture

Well, to be fair, it was UNexpectedly mild.....so that dragged down housing because of sweaty sales reps who turn customers off.

And it was a definite downer for gnomes or people seeking frigidity and ice when they buy real estate

Tue, 02/28/2012 - 10:47 | 2203698 Gully Foyle
Gully Foyle's picture

Caviar Emptor

"so that dragged down housing because of sweaty sales reps who turn customers off."

You do understand that Female Real Estate agents are one of the demographics most likely to cheat on a spouse. Lot's of sweaty in those showings.

Tue, 02/28/2012 - 10:50 | 2203711 Caviar Emptor
Caviar Emptor's picture

You're right. Forgot to factor that in. 

By the way, if a sales rep is sweaty, does that mean that she likes me? 

Tue, 02/28/2012 - 11:02 | 2203764 Gully Foyle
Gully Foyle's picture

Caviar Emptor

Either that or the drugs are wearing off/kicking in.

Tue, 02/28/2012 - 12:29 | 2204199 Farley
Farley's picture

Nah,...that means she liked the previous guy. :-)

Tue, 02/28/2012 - 10:19 | 2203561 Deep79
Deep79's picture

But Cramer told me Housing bottommed in 2009?

 

 

Tue, 02/28/2012 - 10:22 | 2203579 Cdad
Cdad's picture

You should only expect Cramer's call for that housing bottom to be shouted louder now...to overcome the effect of the actual index of home values.

Tue, 02/28/2012 - 10:23 | 2203586 Gomie
Gomie's picture

And yesterday. He was among dozens paraded on MSM to tell us all housing had clearly bottomed. Well they'll do it all over again next month.

Tue, 02/28/2012 - 10:30 | 2203633 Taterboy
Taterboy's picture

Yesterday afternoon a visiting CNBC genius said "housing has bottomed". My cats looked on astonished as their dad said dirty words and then had to wipe the spit off the TV. They instantly shared their catnip with me to calm me down. They then called the cable company to put a block on CNBC. My kittys love me!

Tue, 02/28/2012 - 10:55 | 2203732 WestVillageIdiot
WestVillageIdiot's picture

You sick bastard.  You should be arrested for animal cruelty.  Forcing your cats to listen to Cramer is akin to pulling a Clark Griswold and leaving the dog tied to the bumper.  =)

Tue, 02/28/2012 - 12:06 | 2204076 Woodyg
Woodyg's picture

I think that's a Romney now - where you tie the dog to the top of the car for the 70 mph 500 mile trip - and then wnder why the dog shit himself leaving brown stains running down the back window.

Tue, 02/28/2012 - 10:58 | 2203746 Uchtdorf
Uchtdorf's picture

Hilarious!

Tue, 02/28/2012 - 10:27 | 2203614 Caviar Emptor
Caviar Emptor's picture

No, silly! Cramer said he was housing bottoms in 2009. You know, bootayy

Tue, 02/28/2012 - 11:02 | 2203762 roadhazard
roadhazard's picture

Remember when he had that "number of days until the housing recovery" on the wall in 09' and he took it down two weeks early and declared victory. I laffed and laffed. What a maroon that clown is. BOO YAH, you moron.

Tue, 02/28/2012 - 10:20 | 2203566 Conman
Conman's picture

Quick someone give Case and Shiller a shot of Hopium and enroll them in the BLS school of statistic fudging.

Tue, 02/28/2012 - 10:25 | 2203568 Caviar Emptor
Caviar Emptor's picture

Let's review: 

 

-What you're spending? ....UP

-What you're worth?.....DOWN.

 

That was easy!

Tue, 02/28/2012 - 10:28 | 2203621 cossack55
cossack55's picture

So, when is the quiz?  I'm aceing this baby.

Tue, 02/28/2012 - 10:32 | 2203639 Caviar Emptor
Caviar Emptor's picture

You are sharp this mornin', coss!

Tue, 02/28/2012 - 12:26 | 2204191 donsluck
donsluck's picture

Since when does the "value" of your real estate matter to what you're worth? The value of your real estate is what you get after you sell it. There is no value until the sale of anything. And, as they say, you can buy more real estate in a day than you can sell in a lifetime.

Tue, 02/28/2012 - 10:21 | 2203569 Cdad
Cdad's picture

The economic effect of a collapsing Case Shiller index is priced in.  Due to fascism brought to you by your local criminal syndicate Wall Street banking cartel, the people's net worth no longer matters.  We are all saved....although my condolences are hereby extended to all of you home owners out there. 

Tue, 02/28/2012 - 10:33 | 2203648 disabledvet
disabledvet's picture

Actually this what kills wall street fascism. this isn't a problem for those who don't use margin and don't speculate wildly in the futures and options markets. In short "you think Apple cares with 100 billion in cash?" obviously not--tho this is not a valuation call on that equity. No..if this problem persists it's a problem for state and local tax collection as their revenues dry up and they are forced to turn to Wall Street to pay for day to day expenses via massive borrowing. And YES...that is BULLISH for "Bailout NATION(S)"

Tue, 02/28/2012 - 10:21 | 2203577 prains
prains's picture

can't wait until the contaminated chinese gypsum in the drywall really starts to smell, ouch

Tue, 02/28/2012 - 10:22 | 2203580 Chimerican
Chimerican's picture

The dude with the funky beard from S&P is on CNBC saying there are positive indicators. Prof Shiller says lots of good news biy next year, "kind of the same...it wouldn't be an obvious mistake to buy a house now." I'd rather buy a pig in a poke.

Tue, 02/28/2012 - 10:29 | 2203624 Snidley Whipsnae
Snidley Whipsnae's picture

By next year there might be some good news for residential... none for commercial.

Tue, 02/28/2012 - 10:22 | 2203581 DeltaCharlie
DeltaCharlie's picture

Buffett is made to look like a baffoon! Go on, have another cherry coke. 

Tue, 02/28/2012 - 10:23 | 2203583 kito
kito's picture

negative treasury rates at the plate, negative mortgage rates on deck............

Tue, 02/28/2012 - 10:24 | 2203602 LawsofPhysics
LawsofPhysics's picture

Sweet,

I can get paid to buy more property?  That should help kick inflation into high gear.  what's up you say?  The rent, bitchez.

Tue, 02/28/2012 - 12:30 | 2204204 donsluck
donsluck's picture

Rent is up, but only to match inflation, the buy price trend is generally down, but has slowed. Too early to call a bottom, I would wait 6 months after Greece implodes and revisit the issue.

Tue, 02/28/2012 - 10:23 | 2203584 Roni
Roni's picture

but it is bottoming it means it will keep hitting new bootoms --------bulllllllsshhhh

Tue, 02/28/2012 - 10:23 | 2203585 JPM Hater001
JPM Hater001's picture

Silver solidly over 36 and Gold coming up quickly on 1800.  Cost of a house in PM's continues to roll.

BTW the SGR is just over 49... on it's way back to 34?

Tue, 02/28/2012 - 10:23 | 2203592 The Axe
The Axe's picture

durable goods   housing....market yawns......broken   beyond broken

Tue, 02/28/2012 - 10:48 | 2203702 EscapeKey
EscapeKey's picture

More liquidity expectation. Any and every problem will be solved through credit easing.

Too bad the only ones with access are connected insiders. It's almost as if Bernanke wants the elite to buy all assets on the cheap, as the middle class gradually goes bankrupt.

Tue, 02/28/2012 - 11:49 | 2203981 Kayman
Kayman's picture

"Bernanke wants the elite to buy all assets on the cheap,"

Now you're getting it.

Tue, 02/28/2012 - 10:23 | 2203593 hack3434
hack3434's picture

But...but...Buffett said hormones would fix the housing cris. LOL...Go fuck yourself Buffett! old senile POS... 

Tue, 02/28/2012 - 10:25 | 2203599 AU5K
AU5K's picture

I wouldnt read too much into this.....  Weather, amigos.  The weather. 

Everything is fine.  CNTL-B. 

Tue, 02/28/2012 - 10:25 | 2203601 Snidley Whipsnae
Snidley Whipsnae's picture

But the NAR said... :)

Tue, 02/28/2012 - 12:29 | 2204197 Rentenmark
Rentenmark's picture

The list of those discredited by their bottom calls, or their over statement of sales grows by the day...

Tue, 02/28/2012 - 10:27 | 2203606 Sir Real
Sir Real's picture

I recently received my tax assessment which decreased by about 10%; but will my property tax bill drop by 10%?

Exactly;-)

Tue, 02/28/2012 - 10:45 | 2203693 Professordoomfinger
Professordoomfinger's picture

Must be my lucky year - my assesment only declined 4%.  Now which guy should I vote for today that will print the most money if he's elected?

 

 

Tue, 02/28/2012 - 12:32 | 2204217 donsluck
donsluck's picture

More important, who will kill the least number of humans?

Tue, 02/28/2012 - 10:27 | 2203615 Roni
Roni's picture

wake up america buffet is crap some people still dont get it

Tue, 02/28/2012 - 10:36 | 2203661 Caviar Emptor
Caviar Emptor's picture

Uncle Warren's gonna lead a happy army of  'MeriKanz to the promised mall while strumming his guitar! 

And then he'll let us all shop till we drop while he tells us how good we have it!

Paradise....

Tue, 02/28/2012 - 10:37 | 2203662 Caviar Emptor
Caviar Emptor's picture

dupe

Tue, 02/28/2012 - 10:30 | 2203632 cygnetsong
cygnetsong's picture

The Month over Month numbers form almost a perfect damped sine wave.  Looks like the market is finding its new equilibrium, not a bottom.

Tue, 02/28/2012 - 10:32 | 2203640 mayhem_korner
mayhem_korner's picture

 

 

Looks like Tuesday is 'big bath' day.  Gotta clean up the vomitus so March can start afresh.  

Tue, 02/28/2012 - 10:32 | 2203642 surf0766
surf0766's picture

There will be a massive HUD housing buy coming up. 

Tue, 02/28/2012 - 10:32 | 2203643 Everybodys All ...
Everybodys All American's picture

8 months in a row ... and I would bet if the BLS were truth telling there numbers would be just as bad.

Tue, 02/28/2012 - 10:35 | 2203653 dwdollar
dwdollar's picture

Weird... I thought all those new workers would be buying houses.

Tue, 02/28/2012 - 10:36 | 2203657 kralizec
kralizec's picture

Ride the decline baby!

Tue, 02/28/2012 - 10:40 | 2203660 Atomizer
Atomizer's picture

 

 

15.1% cannot afford to buy homes.

http://www.bls.gov/news.release/empsit.t15.htm

Tue, 02/28/2012 - 11:20 | 2203843 Rainman
Tue, 02/28/2012 - 10:37 | 2203666 q99x2
q99x2's picture

In 1999 rents equaled the payments on rental properties and then you had tax benefits which cancelled out maintenance. So, with interest rates low, today is probably not much different.

Except, where are you going to find someone with a job that won't get laid off or have their wages reduced, steal the copper wiring on their way out, or become a target for drones. Happy LandLording Buffet you two faced globalist MF'r.

Tue, 02/28/2012 - 10:41 | 2203682 Caviar Emptor
Caviar Emptor's picture

We found some good news in the report!!!

 

Year-to-year, only Detroit saw improvement, up 0.5%

 

Quick, call CNBS!

Tue, 02/28/2012 - 10:45 | 2203692 Alex Kintner
Alex Kintner's picture

Ha ha. And Detroit is bulldozing empty houses to prevent blight. So inventory falls and presto...

Tue, 02/28/2012 - 10:50 | 2203715 EscapeKey
EscapeKey's picture

Bulldozing creates employment. Bullish!

Tue, 02/28/2012 - 10:59 | 2203754 Caviar Emptor
Caviar Emptor's picture

AND bullish for pest control industrial-complex

Tue, 02/28/2012 - 13:45 | 2204513 catacl1sm
catacl1sm's picture

Constructive destruction.

Tue, 02/28/2012 - 10:42 | 2203685 adr
adr's picture

Nearly any home built in the last 15 years was made to last for less than 20. Publicly traded builders built homes with the same great planned obsolescence as GM cars and GE appliances. If a home falls down on itself in 15 years it just means we get to build a new one.

You are lucky to get 5 years out of a new water heater. 10 years on a furnace. Buying an American brand fridge, you'll be lucky to make it past the one year warranty. You pay $1500 for a fridge with a $10 compressor made in Columbia. Probably meant to run a tiny dorm type unit for storing cocaine.

It is now the same situation with homes. After 10 years you start to notice roof lines sagging, major leaks, total loss of heat in select rooms. Electrical issues, plumbing problems, bowed walls. When you first look at your new home it looks great. You may even remark how quiet it is inside. The builder tells you that is due to the massive amount of insulation giving the house an incredible r-value. That is far more important to builders than the amount of actual structure built in the walls. After all high R-values are good for green energy credits.

The structure of recent construction is shoddy wood with paper thin drywall. Tools like superpowered nail guns and autohammers make it easy to pay no attention to fitment. I don't know how many new homes I saw with what looked ike spray and pray patterns of nails.

What is worse than owning a 2500 sq ft McMansion dropping in value every day, is owning a McMansion that will be falling in on itself in a few short years.

Anyone that thinks new homes will still be standing in 90 years like those that were built in America from the turn of the century to the 1950s is fooling themselves.

Tue, 02/28/2012 - 10:48 | 2203704 TuesdayBen
TuesdayBen's picture

No doubt.  Got a '59 split level that is built rock solid.  I'd rather buy an older home and fix it up than buy a new one.

Tue, 02/28/2012 - 10:53 | 2203729 dwdollar
dwdollar's picture

Not a roof expert, but I do know why most older homes have simple roof lines. Our ancestors weren't idiots. They built things to last. A slightly aged roof on a McMansion is going to invite the rain inside. No doubt the whole thing will rot 10x faster than a home 5x its age.

Tue, 02/28/2012 - 10:44 | 2203690 silvertrain
silvertrain's picture

 People would love to step in here and buy..The problem is they cant..No jobs, no money for a down payment, and the ones that have the first two dont have any credit..Interest rates are TOTALLY IRRELIVENT..It will be years if not a decade or more for housing to make a comeback, residential that is..

Tue, 02/28/2012 - 11:14 | 2203809 Moneyswirth
Moneyswirth's picture

Ding! Ding! Ding!

We have a winner....you are correct, sir.

Home values can depreciate all they want, but if you and your neighbor dont have jobs to pay for them, it's pretty much a moot point.

 

Tue, 02/28/2012 - 10:46 | 2203695 Robslob
Robslob's picture

BUT BUFFET SAID....

Tue, 02/28/2012 - 10:52 | 2203725 michael_engineer
michael_engineer's picture

From Observations from an engineer | ZeroHedge

 

Looking forward to the coming years, what are the reasonable expectations for housing and many other aspects of the world economy if oil production does at some point start to decrease as projected by the Hubbert Curve? Is the banking business model of providing 30 year home loans at risk? One might think so.  There are projections that at some time we may expect oil production to decrease by anywhere from 2 to 5 percent year after year after year (http://www.drmillslmu.com/peakoil-3.htmand see the World GDP Growth chart and comments). Do 30 year home loans (or any long term loans of any type) make good business sense under a 2 percent decrease (year after year after year) in oil production which is the worlds most critical natural resource? Would they make good business sense under a 5 percent decrease (year after year after year)?  The banks may finally be starting to "get it", and long term credit may be tightening as a result.

Tue, 02/28/2012 - 10:55 | 2203733 Snakeeyes
Snakeeyes's picture

Look at Case Shiller versus FNC index. FNC has been showing a steady decline while CS has been showing stability. Misleading signals from CS?

http://confoundedinterest.wordpress.com/2012/02/28/case-shiller-20-city-house-prices-fall-4-in-december-is-2012-the-new-recovery-summer/

Tue, 02/28/2012 - 10:56 | 2203736 forward ho
forward ho's picture

I really hate to admit this, but I bought a house in miami in 05. luckily? I put down large down payment. house then $265.000.00... house now (if there was a buyer) $90.000.00. 65% drop, but realestate only appreciates... right?

Tue, 02/28/2012 - 10:57 | 2203741 realtick
realtick's picture

Another data disaster for the bulls:

http://chart.ly/2r5wymu

 

Tue, 02/28/2012 - 10:58 | 2203751 Fantasy Planet
Fantasy Planet's picture

On a positive note, the value of "Parents' Basements" continues to increase rapidly. 

Tue, 02/28/2012 - 11:17 | 2203832 krispkritter
krispkritter's picture

Correction, the 'population in' Parent's Basements continues to increase...or as most people now say "I live in the lower level of my folk's palatial accomodations".

Tue, 02/28/2012 - 10:59 | 2203757 shortus cynicus
shortus cynicus's picture

Homes are in first place necessary to live, so they are cost of living.

Falling home prices means falling costs - that's good news.

Tue, 02/28/2012 - 11:08 | 2203791 Conman
Conman's picture

Hey there. Lets solve a quick math problem, as i sense you are actually serious with your supposition. 

Quick math. Lets say you want a widget. Now you think the widget is an investment and will go up in price.

The widget costs 10 quidizzles. You don't have 10 quidizzles and borrow 9 quadizzles to buy it.

Uh oh, the market for widgets has dried up and they now are worth 1 quidizzle! You now owe 8 quidizzle.

so with this scenario do to you think Falling home prices are GOOD NEWS?!

 

Tue, 02/28/2012 - 11:48 | 2203976 shortus cynicus
shortus cynicus's picture

...Now you think the widget is an investment...

No, I don't.

Homes are not an investment because they don't produce any output capital. Homes should be seen as cost of living which should be, like any other cost, as minimal as possible. In some part they could be seen as savings, form of capital, inflation hedge, but never as investment.

If somone is underwater then can simply default and start again happy about lover living costs in new home.

Tue, 02/28/2012 - 11:06 | 2203778 markar
markar's picture

The "dead cat bounce" in markets like Phoenix & Miami is foreign cash buyers. American home buyers are toast.

Tue, 02/28/2012 - 11:13 | 2203803 virgilcaine
virgilcaine's picture

Epic Fed Fail.

Tue, 02/28/2012 - 11:14 | 2203810 Everybodys All ...
Everybodys All American's picture

So if price declines continue would not the mortgage backed securities become more and more impaired? Yes. They would but the banks balance sheet will not reflect the damage. Thank goodness we have Sarbox.

Tue, 02/28/2012 - 11:22 | 2203858 Alex Kintner
Alex Kintner's picture

By now, the Fed has gobbled up all of the most risky MBS and transferred them to the taxpayers. Oh and the banks got 100 cents on the dollar for them from the Fed. Banksters win again.

Tue, 02/28/2012 - 11:31 | 2203910 Snakeeyes
Tue, 02/28/2012 - 11:49 | 2203982 Rentenmark
Rentenmark's picture

Demographics are not on housings side.  There are roughly 85 million baby boomers who will need to get out of their houses, and only about 60 million gen x-ers to buy them.  Simple math says supply will continue to outpace demand.  The gen y-ers are a larger group, but they won't kick into peak house buying years until about 2020.  With the economic and demographic headwinds, plus the fact that housing was so overbuilt during the boom, it seems this down period will continue for some time.

Tue, 02/28/2012 - 11:59 | 2204038 tony bonn
tony bonn's picture

the good news is that prices are declining; the bad news is that they are declining so slowly....the sooner the bottom can be found, the sooner recovery can begin....

Tue, 02/28/2012 - 12:04 | 2204062 radicall
radicall's picture

Looks like April is a good month to sell Up in 2010 and 2011

Tue, 02/28/2012 - 12:34 | 2204228 CoolBeans
CoolBeans's picture

I keep hoping these accurate reports will put a stop to the insane realtor assoc reports that tell everyone that its all daisies and sunshine.  Everytime I see one of those reports, I just want to hurl. 

Tue, 02/28/2012 - 12:36 | 2204240 CoolBeans
CoolBeans's picture

My feeling is (and has been for the past 3 years or so) that I would never, ever buy a house ever again (for a personal residence).  I'm thinking I may not be alone...

Tue, 02/28/2012 - 14:20 | 2204638 flacorps
flacorps's picture

Form an LLC. Buy 16 rentals. Wait a couple of years and do a bunch of 2-for-1 section 1031 exchanges and then you have 8. Repeat. Now you have four. Repeat. Now you have 2. Repeat. Now you have one. Deed it from the LLC to yourself in a tax-free liquidation. Live in it 5 years and sell it. All your lurking gain is tax free.

Did I mention that a few years into this program you started another upside-down property pyramid so you move into house #2?

Tue, 02/28/2012 - 12:51 | 2204314 dirtbagger
dirtbagger's picture

Here is how bad it can get.   Reno NV median price down 62% from $358K to $135K.  Price per square foot $220 to $85 - replacement cost is $110 psf.  70% of sales REO's or Short sales.   Official unemployment rate 14%, unofficial estimated at 22-24%.  

In spite of all of these dismal statistics (realities), home prices are poised to still go lower.   Watch out Below  

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