This page has been archived and commenting is disabled.
No Housing Recovery - Case Shiller Shows 8th Consecutive Month Of House Price Declines
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:
»
- 12932 reads
- Printer-friendly version
- Send to friend
- advertisements -
ooofahhh.....gut punch.
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/
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.
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.
In actuality, it's more like "less poor", but why not go with the corporate media spin.
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?
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.
And an investor looks for just such opportunities, where something is temporarily undervalued. Play your hand accordingly.
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.
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.
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.
That is correct.
Free dollars! Free! Free!
Free at last. Free at last.
A perfect example of a Keynesian recovery.
This recovery is looking more & more lower case q-ish...
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"?
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.
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.
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.
Bullish Hopioum!
Besides, as CNBS explained it, its because of Winter!
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!
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
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.
You're right. Forgot to factor that in.
By the way, if a sales rep is sweaty, does that mean that she likes me?
Caviar Emptor
Either that or the drugs are wearing off/kicking in.
Nah,...that means she liked the previous guy. :-)
But Cramer told me Housing bottommed in 2009?
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.
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.
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!
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. =)
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.
Hilarious!
No, silly! Cramer said he was housing bottoms in 2009. You know, bootayy
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.
Quick someone give Case and Shiller a shot of Hopium and enroll them in the BLS school of statistic fudging.
Let's review:
-What you're spending? ....UP
-What you're worth?.....DOWN.
That was easy!
So, when is the quiz? I'm aceing this baby.
You are sharp this mornin', coss!
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.
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.
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)"
can't wait until the contaminated chinese gypsum in the drywall really starts to smell, ouch
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.
By next year there might be some good news for residential... none for commercial.
Buffett is made to look like a baffoon! Go on, have another cherry coke.
negative treasury rates at the plate, negative mortgage rates on deck............
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.
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.
but it is bottoming it means it will keep hitting new bootoms --------bulllllllsshhhh
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?
durable goods housing....market yawns......broken beyond broken
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.
"Bernanke wants the elite to buy all assets on the cheap,"
Now you're getting it.
But...but...Buffett said hormones would fix the housing cris. LOL...Go fuck yourself Buffett! old senile POS...
I wouldnt read too much into this..... Weather, amigos. The weather.
Everything is fine. CNTL-B.
But the NAR said... :)
The list of those discredited by their bottom calls, or their over statement of sales grows by the day...
I recently received my tax assessment which decreased by about 10%; but will my property tax bill drop by 10%?
Exactly;-)
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?
More important, who will kill the least number of humans?
wake up america buffet is crap some people still dont get it
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....
dupe
The Month over Month numbers form almost a perfect damped sine wave. Looks like the market is finding its new equilibrium, not a bottom.
Looks like Tuesday is 'big bath' day. Gotta clean up the vomitus so March can start afresh.
There will be a massive HUD housing buy coming up.
8 months in a row ... and I would bet if the BLS were truth telling there numbers would be just as bad.
Weird... I thought all those new workers would be buying houses.
Ride the decline baby!
15.1% cannot afford to buy homes.
http://www.bls.gov/news.release/empsit.t15.htm
Requiring a 20% down payment would eliminate 60% of potential borrowers for qualified residential mortgages.
http://www.doctorhousingbubble.com/down-payment-boogeyman-down-payment-of-20-percent-60-percent-buyers-do-not-qualify-for-standard-mortgage-fha-defaults-surge-first-time-buyer/
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.
We found some good news in the report!!!
Year-to-year, only Detroit saw improvement, up 0.5%
Quick, call CNBS!
Ha ha. And Detroit is bulldozing empty houses to prevent blight. So inventory falls and presto...
Bulldozing creates employment. Bullish!
AND bullish for pest control industrial-complex
Constructive destruction.
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.
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.
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.
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..
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.
BUT BUFFET SAID....
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.
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/
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?
Another data disaster for the bulls:
http://chart.ly/2r5wymu
On a positive note, the value of "Parents' Basements" continues to increase rapidly.
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".
Homes are in first place necessary to live, so they are cost of living.
Falling home prices means falling costs - that's good news.
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?!
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.
The "dead cat bounce" in markets like Phoenix & Miami is foreign cash buyers. American home buyers are toast.
Epic Fed Fail.
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.
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.
And when Detroit is the big winner, you know this isn't a housing recovery!
http://confoundedinterest.wordpress.com/2012/02/28/case-shiller-20-city-house-prices-fall-4-in-december-is-2012-the-new-recovery-summer/
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.
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....
Looks like April is a good month to sell Up in 2010 and 2011
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.
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...
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?
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