Tuesday, September 27, 2011

Home prices continue seasonal rise; down 4.1% year-over-year

The S&P/Case-Shiller 20-City Index is down 4.1% from a year ago, but up 0.9% month-over-month. Adjusted for seasonal factors, the index was flat month-over-month:
Home prices in July climbed for the fourth month in a row, but are still down from a year ago.

According to the latest S&P/Case-Shiller home price index of 20 major cities, prices rose 0.9% in July compared with June, but they're still 4.1% lower than 12 months ago.

"We are far from a sustained recovery" said S&P spokesman David Blitzer. "Continued increases in home prices through the end of the year . . . must materialize before we can confirm a housing market recovery,"

Indeed, adjusted for seasonal differences, the 20-city index was flat month-over-month.

Some cities have shown surprising strength recently. In Detroit, prices jumped 3.8% month-over-month, after spiking 5.8% in June. Minneapolis prices increased 2.6% and Washington recorded a 2.4% rise.

Weakness continued in Las Vegas, which was down 0.2% month-over-month and in Phoenix, which edged 0.1% lower.
Since the bounce is entirely seasonal, I expect falling prices in the fall.


  1. Partisan takes another month, bringing us to 4-2, but it's looking ugly for me as the index was actually ABOVE Partisan's predicted value, putting it waaay over the midpoint between us. Coupled with my predicted dramatic plunge, I may have to get all my gloating out of the way over the next 60 days and then just stop visiting the blog...

    I do note that revisions were much, much smaller this month than previously....I wonder if that might set us up for a larger revision next month? Perhaps distressed sales weren't fully included? That could explain the nearly 30% yoy lower volume of sales pairs...

  2. Gloating? JAC(train) please my friend. You were far too civil cordial to gloat. You made a reasonable call based on the facts as you saw them. And you may be vindicated yet, (although I agree with you that even though its early, it looks like I may go 18-0 for the next 18 months). In any event, there is no reason to leave the blog. You deserve no criticism for a reasoned, thoughtful, prediction.

    Also, the whole point of this was to see how well our predictions based on conditions as we saw them at the time compare to the reality of today.  Instead of digging in, and stubbornly insisting you may be vindicated in the end, the facts are making you reconsider and come around to my position (i.e. the bottom has long past).  Likewise, if the facts change and go the other way, I will likely come around to yours (we havent hit bottom yet).  Time will tell.

  3. Also, for the record, here is a consolidated version of our bet.  For ease of reading, (and hopefully formatting) all I am doing here is presenting the estimated midpoint between our predictions, vs what actually happened.  In each case, you had the low side of the average, and I had the high.  Thus, assuming only minor revisions from hereon out, the first 6 months are as follows


    Also, I would be curious to know, while you are thusfar leaning my way, I assume you are not yet declaring "uncle" in that you no longer have any confidence in your predictions going forward.  If I am wrong about this, let me know. 

    As I noted before, I think the best predictors are those that are not emotional about their predictions and are able to call no joy, and revise, long before the bitter end.  If you may recall, on of the reasons I used to ridicule Non/Nonpartisan so much is that no matter how much time went by, no matter how ridiculous their predictions of CS @ 135/100 by 2012 looked, they refused to admit "I was wrong".

    While I think you are nowhere near those fools of years past, I am curious where you stand as of today.  I happen to feel as confident in my predicitons today as I did 6 months ago.  What about you?  Same confidence as before?  More?  Less? None? 

  4. Oh, and finally, while speaking of gloating, JAC, please ignore as this is not directed at you.  This is directed at the ghosts of yesteryear, my old nemesis NOZ and NONPARTISAN who arrogantly told me how DC will hit 135 and 100 respectively, by 2012. 


    They likely dont visit here anymore, but in case they do, and in order to fulfil a promise I made to them that I will be here until 2012 laughing at them, let me say for the record as follows...

    CAW, CAW, CAW!!!!!!!!  BWAHAHAHAHAHAHAHA!!!!!!!!

  5. Well, I do think that I am "right" in the sense that folks are not buying housing and prices in the area are still too high for buyers. I was made a bit more confident about this when I recently received a postcard from my realtor (he sends postcards with recipes as marketing material) that indicated he was intent on helping folks sell their homes quickly "in this buyers market." It seems plain to me that home owners are in a tough spot and trying to wait it out.

    I see this waiting as a kind of pressure, and the question is how this pressure gets relieved. If it remains gradual, then I think you have the edge in our competition. If it starts to get harsh, then I have the edge. What could make it harsh? A massive European financial crisis, reduction of the homeowner tax credit, reduction of the federal workforce or reduction of federal contractors, or (here's a black swan event) a riot or other upheaval in some otherwise new hipster neighborhood.

    If I could revise, I'd probably raise some of my numbers a bit and certainly smooth out the large drop I have occurring in August. That said, I remain confident that house prices are going to slide. In fact, I hypothesize that next month we're going to see the biggest revision yet to the recently released July Case Schiller DC price index. BUT, only time will tell.

    Will we see a new "bottom"? I'm less confident of this, but hey two of the last three months showed yoy price decreases....

  6. With regard to the inventory, what is the signal? I could see high inventory signaling that folks want to sell and leave the area (flooding the market), or I could see it as high prices luring sellers back in. I guess it's a difference between movement along the supply curve and a shift in the supply curve? What was the early warning in late 2005?

  7. Here you go...
    See how the inventory is nice and orderly in 2003 & 2004...rising to 2,000 in the summer and 1,000 in the winter?  Well, that had been the pattern for the whole period of the 2000 til 2004 price boom. 
    Now look what happened to inventory levels in 2005 as the went KABOOOOOM as prices hit a level buyers would no longer pay, and sellers continued to flood the market.  It was thus in Late 2005 that David first noticed that we were in the last throws of the bubble market. 
    Sure enough, in 2006 prices started to decline as inventory rose even further.  Thus, for the observant bloggers, late 2005 was a good warning for the damage inflicted in 2006.
    Inventory continued to decline in 2007, 2008 and 2009 til it finally hit a sustainable pace. (it was too low in 03 & 04, hence prices were rising).   Further, since 2009, we have had literally a parade of horrors brought forth by the bears as to why housing "MUST" come down even further. 
    Yet for every imagined crisis they cited, I checked inventory levels to see if the market was failing to clear like it did in 2005.  Yet, despite the screams of terror coming from the bears about the Option Arm Tsunami, The Foreclosure Moratorium, The Buyers Bribe tax credit, the Flash Crash, the Euro Crisis, etc, etc, etc, inventory just sat there, smugly, refusing to signal that any of their imagined crises had any effect on the market. 

  8. Is there a DC equivalent....?