The September S&P/Case-Shiller Home Price Index of 20 US cities fell 17.4% year over year — that is the most on record and is now down 21.7% from its high in July ’06. On a month over month and year over year basis, all 20 cities saw declines.

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Las Vegas and Phoenix saw drops of more than 30% year over year; 29.5% drop in San Francisco and 28.4% fall in Miami led the pack of mean reverters.

Prices in New York fell 7.3% y/o/y and 5.7% in Boston. The smallest decline was in Dallas, down 2.7%.

The 30 yr FNMA mortgage rate is down now 37 bps today to 5.04% — that is the lowest since mid-September, right after the FNM/FRE conservatorship idea was floated.

Peter Boockvar notes: “The irony as I’ve ranted in the past of the path the Fed has gone down is that too much borrowing and not enough savings got us into this mess and with savings accounts now paying peanuts due to a 1% ff and the Fed trying to force interest rates lower to get people to borrow, the same mistakes are being pushed.”

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Source:
National Trend of Home Price Declines Continues Through the Third Quarter of 2008
S&P/Case-Shiller Home Price Indices, November 25, 2008

http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_112555.pdf

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http://www.tfsbrokers.com/property_derivatives.html

Category: Data Analysis, Real Estate

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

35 Responses to “Case-Shiller Index falls 17.4%”

  1. Archiphage says:

    I feel a Nelson Muntz moment coming on.

  2. Renting in Mass says:

    Pretty bleak. And Case-Shiller is a lagging indicator that hasn’t yet reflected the October craziness in the credit market.

  3. Mannwich says:

    Time to buy! Finally, a bottom. What a relief. Happy times are here again.

  4. TrickStar says:

    I have been watching the Minneapolis housing market for 6 months. I read the postings and look at photos about three times a week. For the life of me, I haven’t been able to figure out why I’m 1) not seeing more inventory come on-market and 2) why the prices are basically holding. I chose Minneapolis (I don’t live there) because it’s a less volatile market, however over six months the data has been dropping like crazy. So why am I not seeing it!

  5. Broken says:

    Same here in California. The local data shows a drop about 30% less than the CS is claiming. Somebody’s numbers are bogus.

  6. AmenRa says:

    @TrickStar and Broken

    The reason is that sellers are holding out for peak price and don’t want to sell at the new levels. Give it six months to a year and they’ll come around eventually.

  7. Mannwich says:

    @Trickstar: I live here in Minneapolis and have been wondering the same thing. My wife and bought in early ’05 and I live in an older part of town (SW Mpls near Lake Harriet) where the values seem to have held steady for the most part and I have seen many “Sold” signs this year here in our hood (don’t think those were foreclosures either).

    The biggest declines appear to be happening in the more shaky parts of the city and the suburbs/exurbs (big declines in some of those places). The economy is not doing well here overall but we are more diversified than most places, so perhaps that is helping to hold things steady?

  8. Ted Craig says:

    I’m curious as to what Mr. Boockvar considers a good savings rate. I’m amazed at the spread between prime and what banks are offering for CDs and other saving vehicles. It’s actually higher than it was in 2000. Banks need cash and they’re paying to get it.

  9. Case-Shiller is very heavily weighted toward the most distressed housing markets including CA, FL, Phoenix and Las Vegas; that doesn’t mean that conditions are wonderful elsewhere, just not as dire as C-S data might suggest.

  10. deeplennon says:

    PDX is 9% off peak… 169.67/186.51 (July 07)

  11. Jim C says:

    His index is designed to sell books.

  12. leftback says:

    Long way down in NYC and Connecticut. I’ll be waiting….

  13. ButtoMcFarty says:

    Out here in flyover land we aren’t seeing the drastic price collapses. However, there are certainly lots of homes on the market, and they are aren’t selling unless the price is “right”. We are certainly down from a couple years ago….but not anywhere near the declines on the coasts.

    I have noticed a big discounts on lake homes. Especially the big fancy ones often used as second vacation homes….if you ever wanted to pick up a Lake Ozark property now is a good time to be looking.

    I know….lots of you coasters are laughing at the dumb hick…..but every time a hurricane hits Florida one can literally hear the Lake Ozark property values ratchet up.

    Like my buddy says….who needs Hawaii when you got the Ozarks??
    LOL

  14. TrickStar says:

    Mannwich –

    That’s just what I’m seeing. 55408 is where I had been particularly targeting. Great ‘hood.

    The foreclosures appear to have hit shaky parts of town before I started hunting around. No surprise, I suppose.

    I guess I just figured I’d see more distress in July/Aug when a huge tranche of loans was supposed to readjust – even in the 2BR/1BA apartment range. Normal cyclicality sees people wanting to sell as we head into Winter. But I’m not seeing that either.

    The best offer I saw was for a great place for sale at $129K. Short sale. I put in a low-ball five months ago, but pulled it. Oddly, prices haven’t dipped much since and I would have been happy with that property at 129K.

    I’m not quite sure I understand AmenRa’s comments. I think the big earthquake a while ago and even the aftershocks are mostly over. Properties that AmenRa refers to likely have the financial flexibility to stay off-market; those properties trade at levels outside of my desired level of investment. If unemployment jacks then there will be some bleeding into my target area, but I suspect it won’t meet my previous expectations about deep value.

    TrickStar

  15. Mannwich says:

    I live in 55410. This whole area seems to be hanging in quite nicely, thankfully because my wife’s company appears to be on the fritz (but she has a contract through early 2010) and my biz has been on the fritz since around mid-year this year. It’s quite possible that we may have to move again. I’d be thrilled if we basically got what we paid for the place (maybe a touch more to cover a few of the improvements we have made) but am dubious that would happen now. Like others, we might just stock up on canned foods, sit tight for a while and hibernate…….

  16. karen says:

    Based on recent and pending sales, homes in my southern california beach town (92672) are back to 2005 prices or lower. Most sellers don’t realize this however, and their homes just sit on the market month after month. They reduce too little, too late…

  17. Mannwich says:

    @karen: Are you rubbing it in my face that you live in a “southern california beach town” while I freeze my arse up here in the hinterlands? Thanks a lot for the reminder.

    It was 11 degrees one morning last week (20 this morning) and that’s not even the worst part. The sun has only come out maybe 1-2 days/week for a good solid 3 weeks now. The good news is that the arrival of December brings more sun. The bad news is, well, it gets much, much colder colder. Sorry to off topic, but I’m looking for a little sympathy here……

  18. karen says:

    Jeff, if it makes you feel better, it is really cold here today, too! 69 and it’s even supposed to rain; but there’s a bit of blue in the sky and i’ve got a low-tide beach walk scheduled for 1:15… i might need to wear a tee-shirt.

  19. Mannwich says:

    69??!?!? That’s tropical to me. I wear shorts until it’s below 50 degrees here. Thanks a lot!!

  20. karen says:

    Jeff, didn’t you live in Boston or NYC? Do you have sled dogs now?

  21. Mannwich says:

    Yes, I did but it’s much colder here in the winter (not as windy though) and winters last a bit longer. Nothing ever thaws here even for a few hours after about mid to late December. Everything is completely frozen over (you know its cold when our nose hairs immediately freeze upon going outside) until about March. The rest of the seasons are very similar to Boston and NYC but without the biting, wet wind, which is nice.

    No sled dogs although I might have to train my little Spanish Harlem shelter mutt to become one…….

    Thankfully I work from home but cabin fever is already starting in November, which is not a good sign for the months ahead. Gotta get to some warmer climes for vacation but funds could be tight this year. Might have to utilize a tanning bed for a cost effective way to simulate the beach.

  22. Bruce N Tennessee says:

    A little off topic, but the last few days we’ve been discussing sales and mall traffic….Redbook settled the discussion today.

    http://www.nasdaq.com/asp/EconodayFrame.asp

  23. Mannwich says:

    @Bruce: What will the Black Friday sales numbers tell us? Can we trust those numbers?

    I have feeling that deep cuts in prices will spur more sales activity but profit margins are going to get crushed.

  24. Bruce N Tennessee says:

    Mannwich:

    I just think that when you get a deleveraging and a pull back in spending, and the basis this time is Borrowed money with a capital B…that this is going to be bad. When you were a kid, and you were trying to put a worm on your hook, remember how much that worm would squirm when he felt that first sting?

    Our government here reminds me of that…I suppose that these men are doing the best they can, but it seems like Japan is coming to America, and that is the “best” scenario…

  25. TrickStar says:

    @Bruce et al: Fascinating. Knew it was coming out, just didn’t track it down. So let’s see…today we got horrible redbook, horrible housing news, horrible GDP news, consumer confidence horrible, record-setting volatility, and, believe it or not, Marc Faber forecasting a black hole that is going to suck the galaxy into nothingness by Q2-09. And yet the markets closed up today…

    From this point forward, unless HankiePoo shuffles the deck chairs again, and we fear a global financial system meltdown, all bad news seems incremental. CFO polls are very, very bearish suggesting that ’09 earnings have significant fear and conservatism baked into them.

  26. Mannwich says:

    @Bruce: I agree with you but I have a feeling the expectations are set so low for Black Friday that anything short of the apocalypse is going to be viewed positively by the market….at least for the very short term. Any quasi-positive news (even of the delusional type) in this environment seems to spur a buying panic, which says to me that people still aren’t fearful enough (and still too worried about missing the bottom) of the unprecedented times we are living in.

    IMO, the real bad news (more lost jobs in droves) isn’t likely to start happening until Q1 of ’09.

  27. Bruce in Tn says:

    Home from the salt mine…

    Mannwich: Let’s just think about this for a second or two…let’s say that the retailers, by slashing prices, are able to get people to buy so that the Xmas season is merely awful and not catastrophic…ok..

    That would mean that the late fall 2008 consumer takes on “non-productive” debt (presents, not starting up a business, you know..) just at the time job losses start to accelerate. Plus next quarter has so many unknowns…like, will China abandon buying our debt? Will oil start to go up in price? Are pension funds going to require higher state and local taxes…(see Mish today), is CRE going to be the problem we all think in early 2009?…

    Maybe the consumer would be Happier this holiday season if they were more solvent..

  28. ButtoMcFarty says:

    I bought my sweetie a swimman ipod yesterday.
    I’m asking for some new Asics trainers.
    Shopping done.

    Ideally we’ll be fitter when the EOTWAWKI comes.

    :)

  29. Mannwich says:

    Bruce: From what I see/hear, I think that far too many people are STILL in denial (or shock) about the state of things today. Honestly, not enough people have a clue (or want to have a clue) about what’s going on, even the basics…..

    Me-thinks that too many will use the holidays to stay mired in blissful denial and/or drown their sorrows in buying even more goods they don’t need. Credit is still far too easy for too many people.

    The first place the masses can look for a role model in how to handle debt are the Feds. How are they doing on that front? ‘Nuff said there.

  30. Mannwich says:

    This is not a good sign. Looks like no country will be spared by this downturn….

    http://www.nytimes.com/2008/11/26/business/worldbusiness/26chinasteel.html?hp

  31. AGG says:

    Average gross wages multiplied by 2.5 is the eventual average sale price of a residential property. High unemployment obviously will exacerbate this trend because a plethora of “motivated sellers” will depress prices further. The problem is further complicated by the current green push to forget the bling and consume only what you need. This is the new status symbol. What do you need a two car garage for if nobody wants two cars? (never mind a three and four car garage). How does 3,000 square feet fare against 1,500 square feet in projected heating and cooling costs? The only thing I see gaining in price is fertile land. The whole modern living model is in jeopardy. Reducing yourself is not tree hugging any more; It’s IN.

  32. Steve Barry says:

    This is no joke…at the current rate, housing will bottom in 2016. The spike up started in 1996…peaked in 2006…it looks symmetrical, so in 2016, it makes the round trip.

  33. Pete says:

    CR ( http://calculatedrisk.blogspot.com/)again has several threads on this today too (here’s one – http://calculatedrisk.blogspot.com/2008/11/real-house-prices.html )
    . A few of those distress sales /REOs etc in specific locations (good urban areas ,close to rapid transit etc) are very tempting but still may be priced far from the bottom .

  34. philipat says:

    Yes, % YOY price changes alone can be misleading. The latest CS alone tempts the view that wow, it’s dropped so much it must be near bottom already. Yet there were 20 years of price increases and just 2 of declines. To see the complete picture, a bar chart below of the same years showing median house price in the same markets would be useful.

  35. philipat says:

    Sorry, I meant inflation adjusted or expressed as a multiple of income.