According to the S&P/Case Shiller 20-city index, prices rose 0.7% compared with March, although they fell 0.1% when adjusted for the strong spring selling season. Prices were down 4% year-over-year.These Case-Shiller numbers really represent March more than April. The S&P/Case-Shiller indices are trailing 3-month indices. The "April" numbers really represent the combined average of February, March, and April.
"In a welcome shift from recent months, this month is better than last — April's numbers beat March," said David Blitzer, S&P's spokesman, in a statement. "However, the seasonally adjusted numbers show that much of the improvement reflects the beginning of the spring-summer home buying season."
I think you guys all know I much prefer year-over-year numbers to month-over-month numbers. The longer time span makes them far less volatile, plus they are automatically seasonally adjusted.
That said, the non-seasonally-adjusted uptick suggests that spring home sales picked up like clockwork. It also suggests that the whole stock market freakout about a possibly weakening U.S. economy over the past two months may be a bit misplaced. I expect to see the month-to-month non-seasonally-adjusted housing numbers to continue rising over the next 5 months or so.
Posts
"James said...That said, the non-seasonally-adjusted uptick suggests that spring home sales picked up like clockwork. It also suggests that the whole stock market freakout about a possibly weakening U.S. economy over the past two months may be a bit misplaced. I expect to see the month-to-month non-seasonally-adjusted housing numbers to continue rising over the next 5 months or so."
ReplyDeleteAgree. Regarding the rest of the US (not DC of course), while the MOM move was indeed a positive, it does not indicate that the country is out of the woods so to speak. Inventory levels are still too high in my mind. I see at best a 50/50 shot at a nominal CS bottom for the US in 2011 with no YOY increases visible until 2012.
BTW James, while on the subject, I have to ask about something you likely do not want to answer, but it still bugs me to this day.
ReplyDeleteIf you recall, in 2009 when we here saw signs the local market was changing, you went on record, (several times) suggesting that DC would bottom after the rest of the country.
I remember at the time thinking - "what is he seeing???" In my mind, looking at inventory levels (which in 2009 were far far below national levels), I was thinking DC had a good chance hitting bottom well before the rest of the country, and at worst, concurrently with the rest of the USA.
Thus, I have to ask, now that you have had 2 years to reflect on it, what were you thinking - what were you looking at that made you come up with this conclusion that we bottom after, not before or concurrently with the rest of the USA? Was it anything other than price (index levels here vs elsewhere)? Were you not looking at inventory (here vs elsewhere)?
Note I ask this as timidly as I can. Unlike some of the idiotic posters (of which I am often one) we have seen on this blog, I have alot of respect for you. Your calls were few and far between, and generally well placed. Moreover, you have taught me alot of things that I did not know. I remember this call specifically as it was one of the times that you and co-blogger David were clearly in disagreement.
Thus I ask this, hat in hand, respectfully as possible, seeking a serious answer. Do you recall what you were looking at at the time (and what you were not looking at) which formed the basis of your call?
Thoughts?
Hi Partisan. Yes, my comments were based entirely on valuation. You seem to remember my comments better than I do, so correct me if I'm wrong, but I think I was arguing that inflation-adjusted prices in the DC area would bottom later than other areas.
ReplyDeleteReal estate prices are sticky on the downside, i.e. they are naturally resistant to falling. What tends to happen instead is that nominal prices stagnate while inflation-adjusted prices gradually get eaten away by inflation. Look at inflation-adjusted prices for the DC area from 1990-1998 as an example of what I mean.
I continue to believe that inflation-adjusted prices in the DC and NYC areas will decline slowly over a very long time, even if nominal prices don't fall. Over the past two years, however, I have definitely been wrong. I underestimated the government's ability to prop up the market in the short-term. I think the big kink in my argument is that inflation right now is near non-existent and will likely remain so as long as unemployment is high. Unemployment is likely to remain high for years. Ultimately, predicting the future is difficult and prone to error. I can easily be wrong.
By the way, thank you for the compliment. I have gained a lot more respect for you since you stopped being a troll.
It may have been an inflation adjusted number, but respectfully, thats beside the point. What you say about nominal bottoming first while inflation catches up is likely true, but its also just as true here in DC as it is anywhere else in the country.
ReplyDeleteThe issue was more of a temporal one. As (presumably all) cities hit nominal bottom, and then inflation adjusted bottom, would DC be first, concurrent, or last among them? You repeatedly stated it would be last. I thought it would be concurrent or (based on our place in the inventory cycle) first.
Again though, I still think your long term track record is good. The only potential "blind spots" that I saw in you was this argument (DC bottoms last), and your variation on the "correction is moving in, just hasnt hit Arlington...yet" one. In the Arlington/Alex/DC case, I knew you were a bit out of your depth in that the bulls were looking at things like disparate income gains (vs the rest of the area), lack of overbuilding (vs the rest of the area), huge swings in racial composition of Arl/Alex/DC (year 2000 vs 2010), etc. Most of your argument for why it hadnt hit yet was simply the lack of major price declines.
In my case, I looked at alot of that data to see if they were full of shit and thought man, that really is some compelling stuff. I didnt say much as I really didnt care personally (I was buying in Fairfax), but I did believe they would eventually be proven correct. Given that Arl/Alex are already at peak prices again, I believe even you would agree they have...
Thanks too for having the integrity to come out and say "I have definately been wrong". In the annals of the bubble blogosphere this is likely a first, as most people seem to be willing to do anything, ANYTHING so as to not say those three simple little words "I...was...wrong".
James, my last post seems to have disappeared. Did you enact comment moderation on this thread. (I dont mind, im just testing to see if the swallowed comment will reappear)...
ReplyDeleteI didn't have any comment moderation intentionally enabled, but the Disqus comment system intercepted it with a message saying, "This comment is Disapproved by the system for possible abusiveness." I don't know what the problem was, but I approved the comment.
ReplyDelete