Tuesday, July 28, 2009

Case Shiller Home Price Index Up Again For Washington Area

The Case Shiller Home Price Index was up for the second month in a row in the Washington, DC metropolitan. In May, it rose .67% on a seasonally adjusted basis.

Is this the bottom for the DC area or will prices start declining again later in the year?

Here is MarketWatch Article on today's number's.

36 comments:

  1. Ohh partisan, how sad for you - yet another month were prices are up on a SEASONALLY adjusted basis. You were so confident that "all bell curves will be completed" - "1998 levels for DC", yet you foolishly didnt look at the evidence right in front of you.

    So what to do - do you give up on your memes now, or do you fight to the bitter end?

    Its clear this is a real confidence shaker for you. You didnt anticipate this up movement, or else you wouldnt be so confident with your "bell curve" meme. Maybe you can hold on a few months when the CS index (likely) falls again this winter.

    My guess is that will give you some newly emboldened confidence. Which will make your predictions even more embarassing when they fail next summer.

    So do you give up now, or do you keep fighting the good fight? I guess we shall see.

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  2. David - thanks for posting this. Ive noticed alot of bubble blogs are simply ignoring todays CS and acting as if it didnt happen.

    I was worried that James may start to do that too as im sure hes not happy with todays results. We may be in for a quiet month.

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  3. Anon,

    Thanks for the feedback. Despite today's Case Shiller Index release for DC area, I still think prices will fall later this year.

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  4. I agree with Partisan. These values and prices and sales are seasonally adjusted. These little upticks in sales and values are supposed to happen, and it doesn't mean too mcuh. What we need is lending to be lighter and the loan mods to be better. I constructed a Mortgage Assistance Program that allows homeoners to remain in their house on a reduced mortgage payment with government assistance (accuriz.com) Check this out

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  5. We are yet to see the forclosure activity in the Washington Area. There is a lot of hidden inventory waiting for a better day. The time horizon being waited for will not have the luxury of delay.

    I live in a bubblicious neighborhood behind the Tysons Sheraton. The neighborhood is extremely international. The properties are held by multinationals that find themselves returning to their home countries. Nearly half of the owners bought at the peak. The fools rush has already subsided and now the direction is downward from here. As I talk with them they willingly admit that they hope to minimize their losses by waiting. Life is short and other demands will force them to sell over time because they all have little or no equity.

    Next year is when the prices loosen.

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  6. "We are yet to see the forclosure activity in the Washington Area. There is a lot of hidden inventory waiting for a better day. The time horizon being waited for will not have the luxury of delay.

    Next year is when the prices loosen."

    I rember last year, we heard a very similar sentiment...2009 was to be the big year when prices fall...

    And yet they are rising. It amazes me the depths of denial that can still be found on this board.

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  7. David said..."I still think prices will fall this year."

    I agree, part of its seasonal, and part of its real (probably).

    However, unlike the last 3 years where we had 12 straight months of cliff diving, we now have the ups and downs you see with a normal market. My guess is one more year til the trend reverses (stays stagnate for good).

    Of course this does Nonpartisan no good. Right now, the declines this fall will have to work hard just to get the price level back to where it was when he predicted "all bell curves will complete".

    The other one I need to get after is NOZ. Ole Nozzy predicted we would see year 2000 prices, not only for PWC and Loudoun, but also Arlington, Alexandria and DC proper. How utterly ludicrous.

    Hey NOZ - YOU STILL OUT THERE???

    NOZ???

    NOZ???

    I got a big sh*t sandwich for ya, come take a bite!!!

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  8. Glad to hear the market is on a rebound. In fact, I just read that new home sales jumped 11 percent in June. Finally, recovery is here.

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  9. "I got a big sh*t sandwich for ya, come take a bite!!!"

    Sorry, that was me, Partisan. I respect James rule that you must have a name if you expect to taunt (which I am clearly doing).

    Speaking of James, I have to ask, (as gently as I can) in the face of what we have seen the last 2 months, do you still think DC will fall last, or do you think that was a bit of wishful thinking?

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  10. Silliness is contagious. The $8000 tax credit ends in November. We are now enering the slower time of the year for home purchasing. Don't get all sticky just yet. Home prices in DC have sill not returned to Shiller's own graphical average. So stay tuned sheep!

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  11. Ahh yes yes, the magical 8,000 tax credit. The one that very few high end buyers in DC even qualify for, im sure they will cause a catastrophe.

    Its funny a year ago, all I heard was the 8,000 tax credit will DO NOTHING - YOU CANT STOP THE DECLINE. Now, those same people are blaming the market rise on it as well.

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  12. I have to admit I'm one of the people who have expected a much larger drop in DC prices and remain in the camp who expects further drops despite this 2 month rise. But I am also willing to admit I might be totally wrong. It certainly is starting to look like DC is somehow fundamentally "different" than every other city that saw huge housing price gains. But if that's the case, then I guess I won't be moving back to dc because I'm be much better off buying in one of the many cities where income/housing price ratio is moving back to a more reasonable level.

    Finally, I must say its funny to see all the people who complained about the gleeful zeal of some "bubble heads" when prices began falling turning to exactly the same sarcastic invective now that they believe they're winning the debate. This isn't a forum (at least in my opinion) for finger pointing and i-told-ya-so's. Its supposed to be a place for constructive discussion and debate.

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  13. "I live in a bubblicious neighborhood behind the Tysons Sheraton."

    I believe we live in the same development as you. Yeah a lot of our neighbors bought at the peak, are underwater and aren't sure what to do. We have one set of neighbors that want to move because their family size is increasing, but they haven't had any offers at all yet - they have lived there for some number of years so I doubt that they are underwater.

    But I guess I would say that this development really isn't that much different from many of the others in the area, so in the end I don't think we have it any better or worse than any of the others in the area.

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  14. "better off buying in one of the many cities where income/housing price ratio is moving back to a more reasonable level."

    yep. My salary could buy houses outright with cash in Florida and California...I cant even buy a starter home here. I got my job and moved here in 2004, I wasnt lucky enough to move here 3 years earlier when prices were 1/5th what they cost now. I will just have to save and buy with cash elsewhere.

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  15. Well, the denominator (i.e. bottom line) must be looked at. With a large dose of perspective.

    The 11% increase - which looks huge - was a net jump of 3,000 homes for one month - from 33,000 to 36,000. Meanwhile, at the bubble peak, there were 125,000 new home sales per month. Granted, any uptick is good, but needs to be taken in perspective. After all, 11% of a dollar is only 11 cents!

    Also, we are currently averaging around 10,000 foreclosures PER DAY which certainly has put downward pressure on home prices, and contributed to an uptick in sales.

    I still beleive in an eventual reset to late 1990's prices. I think (and hope!) that the downward spiral will begin again this fall. I suggest that those who need to sell ride this morsel of "good" news, cut their losses now, and get out!

    Of course, these are national data - DC is apparently immune!!?

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  16. Darwin, I think you arent following the conversation - you are posting about new sales whereas this post is about case shiller. Did you mean to post this here???

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  17. "Kahner said...
    I have to admit I'm one of the people who have expected a much larger drop in DC prices and remain in the camp who expects further drops despite this 2 month rise. But I am also willing to admit I might be totally wrong. It certainly is starting to look like DC is somehow fundamentally "different" than every other city that saw huge housing price gains."

    I think what happened is that after years of being a bit player, DC put on its big boy pants and is acting like a real city where affordability is a problem.

    As of right now, NY has held on to the most of its year 2000 gains (case shiller @ 170), but DC is right there nipping at its heels (CS @169) and rising/not falling as fast as NY.

    If it catches up to NY as I expect you can safely say the run up in DC is the best of any city measured by the CS.

    Honestly, I too am surprised by this. Then again, someone posted the income gains for DC - I couldnt believe how strong they were. I guess the BH were right, it IS different here...

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  18. Folks... This is a short-term glitch. The long-term demand curves are clear. Artificial credit is over, We will continue falling back to the historic trend line of home values, or we may even fall under the trend line for a period of time as the economy continues to under-perform and joblessness continues to rise.

    The fundamentals are simply not there for a sustained resurgence of home sales above historical trends. Every indicator points towards a continuing drop in home values - perhaps another 10-15% before we flatten out. Sorry to 'burst your bubble'.

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  19. "Every indicator points towards a continuing drop in home values - perhaps another 10-15% before we flatten out."

    Dontcha mean every indicator EXCEPT price?

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  20. Well, I gotta admit, Case Shiller is making a true believer out of me. I used to rail against the DC is different crowd, and I still dont think they knew what they were talking about. Still, there is only so long that I can deny reality.

    Heres a question for my fellow bears out there, what, if anything would make you willing to admit the "cliff diving" part of the decline is over?

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  21. Short-term indicators are noise. Long-term indicators set against broad economic indices are a better predictor.

    I'll see you back here in 18 months. If U.S. housing in aggregate hasn't fallen -at least- another 10% from today, beers are on me.

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  22. "Short-term indicators are noise. Long-term indicators set against broad economic indices are a better predictor."

    yawn

    "Housing always leads out of an economic decline. Long term trends of declining inventory are the best indicator of rising prices."

    See, I too can make a convincing sounding argument that is nothing more than me saying I think price declines are over.

    Bottom line is price and after 34 months of going down, it is going the other way.

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  23. One thing that makes me doubt the "anti-bears", if i can coin a term, is the certitude in many of their predictions. For example "Bottom line is price and after 34 months of going down, it is going the other way." I'm not saying that's wrong, but some very small and possibly seasonal fluctuation does not make a airtight case. When people treat their opinion as fact, it makes me doubt their impartiality.

    To quote Bertrand Russell, "The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt." That's not meant to call anyone here stupid, I just think its a good quote.

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  24. Kahner - fair enough. For me personally, I agree with David, we very well could have further drops.

    At the same time however, this blog has a sizeable population who thinks this is "just getting started" or that the big drops are just around the corner.

    The people who still think that are suffering from a severe case of denial are in for a rude awakening.

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  25. I pay $2K a month to rent a suburban DC area house the current purchase price of which (based on neighborhood comps) would be AT LEAST $500K. With a price/rent ratio that out of whack--no landlord could even come close to getting positive cash flow if buying the house today--I just can't see how home prices over the next 3-5 years can go anywhere but down.

    DC is an exceptional market because we bleed the rest of the country to pay our blundering bureaucracies and the hordes of opportunists who crawl all over each other to get their snouts into The Trough. So at least in the close-in neighborhoods, I wouldn't expect to see rapid adjustment of the kind you see in areas where people actually lose their jobs. I think in DC it will be a long, slow wilt in real prices....from here largely accomplished thru inflation.

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  26. Partisan,

    I don't know what to say other than you're an idiot.

    We're still going down...a will keep going down. Well below what you expect that's for sure.

    By the way, can you recite where I said year 2000 prices? I'm just curious because I can't remember honestly. I'm just wondering if you're pulling that out of your a%% like everything else you say.

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  27. "I pay $2K a month to rent a suburban DC area house the current purchase price of which (based on neighborhood comps) would be AT LEAST $500K."

    I beat you, Im renting a place for $1550 and the neighbor has his house for sale at $850K!!!!

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  28. Two observations.

    First observation: I won't ignore the data. Data is data is data.

    Second observation: Foreclosure in a condo near me. Now on market at 10% below comparable and already reduced one bedrooms in NW.

    Conclusion: Data isn't bad now. Market was up. 401k people had a good quarter. A little optimism in some of the numbers. But if unemployment continues to rise and foreclosures with them, I don't see how the this current trend will be sustained. Foreclosures are just like a cancer; they eat away at value.

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  29. Bulls and Bears: Why on earth would you expect a flat period of prices. Whether it is 10% lower or 10% higher from here, I just don't see flat prices. We go up 200% in five years and then down 30-40% in three years and we at some near-term point in the future will go flat? Doubt it. Yeah, that's what happened in the 1990's, but what data or theory supports flat prices?

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  30. I have been house hunting in DC proper (Dupont/Logan) and looking at condos in the $700k and up range--and every single "luxury" condo I have viewed in the last six months is STILL on the market and in almost all cases the sellers refuse to lower their prices.

    I even had one seller of a $900k condo in Adams Morgan, that has been on the market for 8 months, flat out tell me that she will not lower her price.

    I think the reason we are not seeing big price declines yet in DC itself is because, at least on the high end of the market, sellers would rather let their overpriced home SIT there for months rather than lower the price.

    Anyone else see the same?

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  31. "Long term trends of declining inventory are the best indicator of rising prices."

    Wait, you just validated my forecasting argument based on long-term, rather than short-term, trend data. I agree with your statement, and remain that short-term behavior in virtually ANY economic system is called NOISE.

    The downward price pressure on housing is caused by artificially inflated values (easy credit), defaults / bad debts, lack of currently available credit, rapidly increasing unemployment, deflation, a 35% drop in core wealth (capital markets) since 10/08, crash in GDP, market anticipation of greatly increased Democratic taxation, etc..

    Like I said, see you in a year or two. Nobody can be certain, but I fail to see ANY economic foundation (beyond a small group of pent-up seasonal buyers and investors) for housing values to start trending up again. At best, we'll see a flattening. More likely, we'll see a continued downward trend until we reach the historical trend line or perhaps a period of undershoot.

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  32. "More likely, we'll see a continued downward trend until we reach the historical trend line or perhaps a period of undershoot."

    ...that being 1999

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  33. In my experience LL's don't buy 500K properties. They don't pencil out. The example given for price/rent ratio's for 500K and 850K are not representative unless:

    1. you have a long time owner.

    2. you have a stupid investor/LL

    3. you have a "default" LL that couldn't sell and needed/wanted to move.

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  34. Great news or just a seasonal factor coming to play? Residential sales activity is returning to the levels of the seasonal sales market. No one should be surprised that new homes sales have increased with the incentives of the $8,000 new home buyer program and interest rates below 5.5%.

    But hold on, seasonal sales activity should be up. The peak months for sales will be June, July and August. So for the next several months we should continue to see a recovery in activity. The key benchmark for recovery is the median sales price, which is still down. Once the excess building supply and foreclosure activity (Housing In Crisis , Mortgage Assistance Program) abates, this number should correct itself to higher levels of $220,000 to $225,000. This will not occur until the summer selling season of 2010.

    So yes, great news, but the real recovery is still a year off.

    See http://accuriz.com/RealEstate_Reports.aspx
    for more details

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  35. IAS360 HPI reported gains in May across the board too. That index includes information down to the neighborhood level and is published monthly for more timely results. I follow that one as well as the Case-Shiller.

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  36. "1. you have a long time owner."

    Yeah the guy I rent from bought in 1999 when this $800K home was only $190K. Lucky SOB! I wish I moved here before the bubble....I will probably move away before its bursts as well. Oh well.

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