Wednesday, March 30, 2011

S&P/Case-Shiller indices still falling

From the press-release:
Data through January 2011, released today by Standard & Poor’s for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, show further deceleration in the annual growth rates in 13 of the 20 MSAs and the 10- and 20-City Composites compared to the December 2010 report. The 10-City Composite was down 2.0% and the 20-City Composite fell 3.1% from their January 2010 levels. San Diego and Washington D.C. were the only two markets to record positive year-over-year changes. However, San Diego was up a scant 0.1%, while Washington DC posted a healthier +3.6% annual growth rate. The same 11 cities that had posted recent index level lows in December 2010, posted new lows in January. ...

“Keeping with the trends set in late 2010, January brings us weakening home prices with no real hope in sight for the near future” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. “With this month’s data, we find the same 11 MSAs posting new recent index lows. The 10-City and 20-City Composites continue to decline month-over-month and have posted monthly declines for six consecutive months now.

“These data confirm what we have seen with recent housing starts and sales reports. The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery. At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing.


  1. New update from the folks at Redfin:

    It seems they're noticing also that the number of transactions is way down. It makes sense that prices are "sticky" going down in a way they weren't on the way up--new securitization practices and loose underwriting standards allows folks access to unprecedented amounts of financing on the way up. Those folks don't want to eat a loss on their place (maybe they can't afford to!) and are doing whatever they can to avoid that--which is to say, renting the place out. I suspect there are plenty of reluctant landlords out there, a group whose numbers are growing.

    I've been staring at charts of the Case Schiller DC area data including the price index and the "sales pairs". Hoping to answer the challenge and make a forecast out to Dec 2012 just for fun and see if others will join in. Teaser: the model I have right now does not take us below the March 2009 bottom...but I'm not quite done staring at it yet...

  2. JAC - great idea! Also, seeing as I am the most obnoxious with the CS chart, I will be happy to start it. I encourage others to do it to...pull out the chart, stare at it and make some projections.

    (Dowload the "January 2011" Not-Seasonally Adjusted Home Price Index Levels, and then scroll over to the Washington section)

    Like JAC I think you will have a hard time making a realistic projection that puts us below March 2009 bottom. If you are game, come up with a screen name so we can keep track of who said what, and put down the next 23 months (feb 2011-Dec 2012) of what you anticipate to see.

    Question/proposal for JAC before I post: I plan on only going out to one decimal place (i.e. January 2011s shall be 183.8). Sound good?

  3. I smell low self-esteem.

  4. Tsk tsk. You can do better. Cmon, tell me im a desperate homeowner scared shitless. Tell me im a shut-in spinster with 6 cats who cannot find a husband. Tell me im a pathetic 12 year old boy in Idaho who doesnt know shit about owning.

    Tell me you want to meet me in a parking lot and kick my ass!!!

  5. Tsk Tsk. You can do so much better... Tell me im a desperate homeowner scared sh*tless. Tell me im a shut-in spinster with 6 cats who cannot find a husband. Tell me im a stupid 12 year old in Indiana who doesnt know sh*t about home ownership.

    Better yet, tell me you want to meet me in a parking lot and kick my ass!!!


    Ok, for starters, let me say that when I bought my house, I had an expectation that Case Shiller (CS) in DC would hit 160. Thus if it stayed above this I wouldnt care, but if it fell below, I would be distraught (thinking I bought too early). To this day, as far as I am concerned, anything above 160 is gravy...simply gravy because I didnt expect to gain much on my purchase for a looong time.

    Also, when my prediction inevatably turns out to be wrong, and the catcalls from angry bloggers start, just keep in mind, the bottom was, is, and continues to be 165.94 hit in March 2009 (rounded to 166 here). So sorry you missed it...

    So, with that said, here is my prediction for DC CS the next 23 months, rounded to the nearest half (0.5) points:

    Mar - 166.0 (this was the bottom)

    Jan - 184.0 (this is todays value)
    Feb - 183.5
    Mar - 183.0
    Apr - 183.0
    May - 183.5
    Jun - 184.5
    Jul - 186.0
    Aug - 187.0
    Sep - 186.5
    Oct - 186.5
    Nov - 186.0
    Dec - 185.5

    Jan - 185.5
    Feb - 185.0
    Mar - 185.0
    Apr - 185.5
    May - 186.5
    Jun - 188.0
    Jul - 189.0
    Aug - 190.0
    Sep - 189.5
    Oct - 189.0
    Nov - 188.5
    Dec - 188.5

    Overall, I see a pretty stagnate market, rising in summer and falling in winter (due to usually seasonality in prices). This summer (2010) prices got as high as 187 so at best I see YOY stagnant prices for 2011. In fact its possible we go YOY negative in 2011 (causing our resident doomers to be whipped up into a frenzy - all the while ignoring the fact that the bottom is, was, and will continue to be 166 back in Mar 09).

    By middle of 2012, I see prices gaining at best 1.5% or maybe 2.0% on a YOY basis. Hardly a zooming market. At this pace it would take decades to hit the 2006 high of 251 (back when I was a rabid doomer, much like the misplaced souls of today).

    So there you go boys. Please note, we are going to try to have a rational discussion here, so those who want to continue to lash out at me in anger/frustration at missing the bottom, please do it under the separate entry I will make just after this. If anyone has the stones to post their own numbers and have a competition just for fun as JAC said, please join me. Also, if possible, please round your values to the nearest 0.5 (I would prefer someone not to go 0.1 above or below me like they do on the price is right).

    Good luck to JAC and anyone else looking to participate. Looking forward to seeing some interesting numbers...


    Ok as I noted in my other post below, I hope to have a rational discussion/competition from those who want to try their hand at posting their own projections as to how the next 2 years go.

    As many of you are angry and frustrated that you missed the bottom and are incapable of addressing the data, please continue to lash out at me personally here in this thread (not in the thread below)

    So please, do it not for my sake, but for the sake of other responsible bloggers like Montpelier, James A Clark, JAC, Lynn, heck even James if he is inclined to participate.

    Hopefully you can let the adults (of which I am clearly sometimes not) have a grown up discussion on the other post/thread. Hopefully James will help enforce that rule if need be.


  8. Meh. OK, not that it will make a whit o' difference on where we end up, but sure what the hell, here you go.

    Jan - 184.0 (this is todays value)
    Feb - 183.5
    Mar - 183.0
    Apr - 182.0
    May - 182.0
    Jun - 182.0
    Jul - 181.5
    Aug - 181.0
    Sep - 180.5
    Oct - 180.0
    Nov - 179.5
    Dec - 179.0

    Jan - 178.5
    Feb - 178.0
    Mar - 177.5
    Apr - 177.0
    May - 177.0
    Jun - 177.0
    Jul - 176.5
    Aug - 176.0
    Sep - 175.5
    Oct - 175.0
    Nov - 174.5
    Dec - 174.0

    Hmmm. OK getting back down to 166 isnt as easy as I thought. If I carried this through til 2013 (when prices stabilize for good IMO), I say we get down to 172-170. Either way I still dont see much of a need to buy buy buy!!!

  9. 2011
    Jan - 184.0 (this is todays value)
    Feb - 183.5
    Mar - 183.0
    Apr - 183.5
    May - 184.5
    Jun - 186.0
    Jul - 187.5
    Aug - 188.5
    Sep - 188.5
    Oct - 188.0
    Nov - 187.5
    Dec - 187.0

    Jan - 186.5
    Feb - 186.0
    Mar - 186.0
    Apr - 187.5
    May - 189.5
    Jun - 192.0
    Jul - 193.0
    Aug - 193.5
    Sep - 193.0
    Oct - 192.5
    Nov - 192.0
    Dec - 191.5

    Fear the Bernank & his continuing ability to print Fiat.

  10. Thanks for partisanicipating! I'm going to stare some more and hopefully post by next Weds...I do think my numbers are going to go lower than yours and I may create a new bottom just for fun's sake... Have a good weekend!

  11. I notice no predictions for sales pairs...are you guys looking at those numbers? Inconsequential?

  12. It's official, Partisan (a.k.a. Castara, a.k.a. Tracy30, a.k.a. Anonymous) is predicting a DC-area housing decline from current levels, although he conveniently made sure his predictions don't go below the March 2009 lows.

    Partisan, if you're going to pretend to be someone else, at least use a different writing style so it's not so obvious.

  13. He has mommy issues.

  14. "although he conveniently made sure his predictions don't go below the March 2009 lows."

    Of course I do James!!! Ive said for a while now that MARCH 2009 IS THE BOTTOM.

    If you havent figured it out by now, a good half of all the traffic to your site is me having fake conversations with myself to entertain the lurkers & the like... And to goad the otherwise silent anger filled bears into engaging me into a "discussion". Frankly, I cant believe it took you so long to figure this out.

    Say, since you are here, (and apparently since my dont go below the March 2009 leveks irks you), care to post your own numbers? Care to play along? My guess is that is a no, but we shall see.

  15. True. Im also morbidly obese. I bathe myself with a sponge on a stick...

  16. I'd be quite happy with these numbers. So I'll follow Tracy30. A little more optimistic than I would guess, but what the heck!

  17. "a good half of all the traffic to your site is me having fake conversations with myself to entertain the lurkers & the like"

    A good half of the comments, but the vast majority of visitors don't leave comments.

  18. OK, here is my shot at this thing:
    Month Index Sales pairs
    Feb-11 182.5 2775
    Mar-11 181.0 2600
    Apr-11 179.0 3025
    May-11 180.0 3875
    Jun-11 177.0 4450
    Jul-11 177.0 4600
    Aug-11 170.5 4850
    Sep-11 169.5 4400
    Oct-11 169.0 4370
    Nov-11 168.5 3900
    Dec-11 168.0 3820
    Jan-12 168.0 3350
    Feb-12 167.5 2970
    Mar-12 167.5 2800
    Apr-12 166.5 3150
    May-12 166.5 4100
    Jun-12 166.5 4700
    Jul-12 166.5 4800
    Aug-12 166.0 4900
    Sep-12 166.5 4850
    Oct-12 166.0 4800
    Nov-12 165.5 4200
    Dec-12 165.5 4200

    Here is my narrative: the increasing prices we've seen in the DC area are a result of skewed bias toward more higher priced transactions taking place, a phenomenon that will get broken as summer leads to fall in 2011. My thesis is that folks who bought will just no longer be able to hang on and will finally accept that the price of their condo/house has to come down. Once that happens, transaction numbers will start to recover but due to plentiful inventory and uncertainty about proposed new mortgage rules, prices will not recover. A new bottom is found in winter 2012, prices weighed down by Fed regulations on mortgage securitization agreed to once the Nov 2012 Obama victory is in the bag.

    OK, now to rules for how we calculate who won...sum of the differences between our projections and the actual C/S numbers?

  19. JAC - looks good to me. While I find the skewing thesis plausible, I personally dont like it because its also possible that the massive price rundown we saw was a skewing toward lower priced transactions, and todays values are simply a lessening of that skewing. I guess we will just have to agree to disagree (since thats the whole idea between the bet isnt it :)

    Also, on sales pairs, I will be honest, I gave up tracking them a while ago since I didnt find them that relevant. Thus, you will have to have a bet with yourself on that one. That said, if you do win, and if you think tracking sales pairs was an important reason why, please let me know.

    Finally, regarding calculating who won, yeah it should be the breakpoint between yours and my values each month. Thus for example, in Dec 2011, you picked 168.0 and I picked 185.5. The average between these is 176.75. Thus if that month comes in above 176.75, I take it - and if it comes in below 176.75, you take that month.

    I will try to put together a table with yours & my values & the average a bit later so it will be easy to track. That said, before I do, I have one question regarding your july/august values:

    Jul-11 177.0 4600
    Aug-11 170.5 4850

    Did you mean to have such a jarring drop of 6.5 points between the 2 months? I ask because most months have at most a 2 or 3 point drop. Thus its possible you made an error here.

    Either way let me know.

  20. What about other folks that have submitted? Can we just calculate the difference between projection and actual for everyone? Might we be interested in revising our projections every month as well, or is that overkill?

    I probably should have smoothed that out a little more but will stick with the numbers I submitted.

  21. JAC - as I noted above, the other entries were just me sockpuppeting in an effort to drum up (real) entries. Sadly, none of our regular sideline snipers had the courage to participate.

    Anyway, here are yours & my predictions & averages. Please double check my work & correct as necessary:


    As far as revisions go. Once a month is indeed overkill - it makes the whole idea behind the bet meaningless, plus you can get too momentarily bearish or bullish based on most recent (but perhaps not relevant) data. Ive found its best to preserve the bet as an indicator of what (a) your sentiment was at the time and (b) how well that sentiment matched up to reality.

    That said, feel free to revise whenever you feel necessary. I myself have done it twice in the past two years. Just have the intellectual honesty to recognize that your former projections were "wrong" as such.

    Again, I dont think this is going to be a problem. Odds are good both you and I will be wrong trying to project so far out into the future. Your predictions are reasonable - as are mine. Thus, I will never give you a hard time if time does prove you incorrect. Moreover, I will defend your thoughts against anyone else who disparages you, given the fact they did not have the stones to make a prediction at the time.

    In any event, see you next month, and good luck (but not too much good luck :)

  22. Ha! You are one crafty SOB! OK, see you next month...

  23. I'm waiting for the spring Case Shiller numbers to come out in summer, and then I'll update my Case Shiller Rollercoaster!

  24. A market in equilibrium is defined by the sale price. In disequilibrium it is defined by the spread between bid and ask. Bids are private, and according to, often shill bids.

    No liquidity == meaningless quotes.

    I could say I'll sell you my left testicle for $47B. Since there are no buyers at or near that price, it's not really for sale. Does that make any part or whole of my body worth $47B? No.

    I could say I'll sell you my house for $1.2M....