Case Shiller Index Falls 19%
By Barry Ritholtz - March 31st, 2009, 10:27AM
The Case Shiller 20 city Home Price Index fell 18.97% y/o/y — the rate of decline is the most in this cycle. Both on a y/o/y and m/o/m basis, all 20 cities saw a decline. Phoenix, Vegas, SF, Miami and LA continue to lead the drop.
The cities was the smallest y/o/y fall was Dallas, followed by Denver and Cleveland. As opposed to the FHFA HPI, Case Shiller does include homes backed by non conventional mortgages but is less geographically diverse. Due to high foreclosure rates, the cities with the biggest falls in price will likely be the first to hit bottom but that bottom hasn’t been seen yet.
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January 2009 Year Over Year Prices
As of January 2009, prices have fallen back to 2003 levels . . .
January 2009 Prices Back to 2003 Levels
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Metropolitan City Index
March 31st, 2009 at 10:37 am
Where is the commercial real estate analogue for Case-Schiller’s residential index? Is there one?
I’ll wager that we’ll see CRE following a similar path with a 6-month lag time.
March 31st, 2009 at 11:07 am
For the first time in January, all 20 cities show declines of more than -10% from their respective peaks. 9 out of 20 are down more than -30%. Still a bottom looks like many months away yet. Phoenix fell a whopping -5.5% from the previous month. Detroit prices are back to levels not seen since July 1996!
March 31st, 2009 at 11:07 am
Barry, your problem is you don’t see all the positives in that chart. You need to look at them like Erin and that fill-in do.
http://www.cnbc.com/id/15840232?video=1078668455&play=1
http://www.cnbc.com/id/15840232?video=1078650591&play=1
March 31st, 2009 at 11:11 am
Given the slope of the rise, the rate of decline is not that alarming. What alarms me is the apparent bottomlessness of the housing market. Wow. Note to Bernanke, keep the printing press warm.
March 31st, 2009 at 11:14 am
More importantly, where is Evel Knievel on this chart? He seems to be missing.
March 31st, 2009 at 11:35 am
Speaking of the declines in Dallas, about half of the 4.9% y/o/y decline can be attributed to the latest Dec/Jan period.
Having lived here most of my life, I can tell you that it is a bifurcated market. It has not had the big bubble in prices that SoCal and others have had. But large swaths of the city resemble bubble areas, and sales volumes in those areas are very depressed. A realtor friend tells me that there is a standoff among sellers and buyers of higher-priced homes.
These condos were originally for sale. Now the majority are for lease. The condo association dues are 40 cents a foot; so you’re looking at $800 for a 2000 ft place, and that does not include utilities. These were built in a neighbor where you can buy a larger house for less money. They’ve reduced prices once already but the place is still almost empty when I drive by.
March 31st, 2009 at 11:36 am
coming into the witching hours – best to check under the hood to see what is left.
vix looks ready to run again
dollar looks to be consolidating
turnaround tuesday may turn the wrong way – still too early to tell.
March 31st, 2009 at 11:37 am
Erin is consistently upbeat (never mind wrong) on any negative Economy news on any front. I bet she has a long contract at CNBC. She is cute and sexy till she opens her mouth. At least she is consistent!
March 31st, 2009 at 11:43 am
Anecdotally, I can say that lower to middle-end homes (high $100’s-$400K) here in my neighborhood in the Twin Cities seem to be selling if they’re in decent shape (mostly older homes here) and not on a busy road. There are indeed some homes that have languished on the market for over a year now, but many of those homes are on busy roads (noisy) and some look to be in rough shape. “Sold” signs seem to be popping up everywhere on the quieter, less traveled streets. One a block down the street was only on the market for less than a week. I’m wondering if the lower interest rates and the dip in prices are bringing people out to buy, particularly first-time buyers, in select areas? After all, real estate is still about location, and this location (I know I’m biased, but…) is pretty desirable. The next town over, Edina, which is one of the richest towns in MN, has actually had price GAINS, if you believe the stats. The public schools are among the best here and location (about 15 minutes from downtown Mpls) and amenities (lakes, creeks, parks, bike trails, nice town center) are still very desirable. So to me, it’s still all about location, obviously. Some towns/locations are struggling badly but others are hanging in there just fine.
March 31st, 2009 at 12:00 pm
Jeff,
you may care to cut out the middleman, Sell, Haul anchor, and Sail, might put things to rest..
plenty of opportunities, for a bright boy like yourself, anywhere found..
March 31st, 2009 at 12:06 pm
call me a skeptic – but i think 804-805 would be the next target before more weakness.
March 31st, 2009 at 12:08 pm
@Hoffer: If/When the wife’s company/job go bye-bye (not rooting for it but have to be realistic), we may be going bye-bye from the TC too. To be honest, I wouldn’t mind selling, grabbing our equity and renting for a while. Might be nice to have a “super” to call again.
March 31st, 2009 at 12:12 pm
Jeff,
well, as you know, tis’ becoming ‘Selling Season’, and the sales-cycle takes longer than TDAmeritrade..
you’d, probably, be surprised, as to the dealz available on the apartment end, might be worth checking out–EZer to pay off a Lease, than a Mortgage, no?
March 31st, 2009 at 12:13 pm
A realtor friend tells me that there is a standoff among sellers and buyers of higher-priced homes.
There’s no standoff.
Buyers never “need” to buy. There is always a crop of sellers that need to sell (three D’s: Death, Divorce and Disease.)
So you know the end of that story.
March 31st, 2009 at 12:17 pm
Me-thinks that higher end home prices are next to dramatically fall in big numbers. That will likely further depress lower end home prices as well.
March 31st, 2009 at 12:24 pm
It would be interesting to see the updated Case-Shiller median home price divided by real income. The last time the chart was posted, it was at 3.62 in October ‘08 when the historical average is 2.7. All the NAR-produced crap that suggests things are more affordable now. Yeah, more affordable compared to the peak, but still overcooked by historical measures.
March 31st, 2009 at 12:44 pm
tCA, I was going to make a similar point.
Main Street fundamentals on jobs and income, and not ‘historical averages’ on sales, will influence where bottoms are found in each segment of each major market.
And the Main Street economics trend towards the gruesome.
Recession pulls down employment which pulls down median yearly incomes in the aggregate. Recent upticks in gas prices are not helping. And 2009 wage give-backs plus forced furloughs are sapping yearly incomes as well as vexing FICO scores which cant reflect furloughs.
Banks are loathed to say it in public or on TV (let alone in testimony to Congress), but they’re watching the median creditworthiness of the American household drop, drop, drop every month.
So downward moving home prices are chasing downward moving yearly incomes of buyers whose aggregate median creditworthiness is downward-moving.
No wonder Team Obama & the Feds prefer to be simplistic and quote historical trends instead.
What happens when regulated banking returns to demanding 20% down on a $250k house? How many buyers are close to having $50K for a downpmt?
March 31st, 2009 at 12:54 pm
Public housing coming! With price drops like this Tiny Tim will have to pay his private partners to take these toxic assets (he is already really). Might as well knock out the middleman and transfer title of defaulted properties to the Feds and let them collect something from the squatters.Create a Federal Housing Police as part of Homeland Security.
March 31st, 2009 at 12:59 pm
“A realtor friend tells me that there is a standoff among sellers and buyers of higher-priced homes.”
In fact, realtards know that there is a standoff between owners of higher-priced homes and reality. Every week there are more and more homes on the market in Fairfield Co, CT between $600K and $1.5M. Some of these are nothing special – e.g. townhouse condos or unadorned Capes. Needless to say, mes amis, these owners are in dreamland, not to mention massively underwater (no that’s not actually “waterfront”).
Supply is growing consistently and demand is sitting on its arse for 18-24 months, waiting to pick off the tasty cherries. There is only one winner in this contest.
March 31st, 2009 at 1:49 pm
Leftback:
You are right there. Our realtor told me that she was acting as a buyers againt for a doctor/nurse couple with a lotta bucks but she kept telling them to pass on the big mansions in uptown New Orleans. They were still way overpriced. Some realtors do have ethics. Hope she eventually got a commission from them. She certainly earned her commission from us.
Will T:
Similar thing in some areas of Houston. West University home prices doubled from 1998-2008. The inventory is just building up now. Listings were 297 in early Feb. Today there are 372. Also more “for rent” signs going up. There is currently almost a 12 month inventory, which is close to 3X the same period in 2006.
March 31st, 2009 at 1:49 pm
Will T
How is The SouthSide on Lamar doing?
I was involved in this project, way back when.
It is the old Sears building south of the convention center.
March 31st, 2009 at 2:01 pm
The Onion has a great idea to fix the economy:
http://www.theonion.com/content/opinion/the_only_way_out_of_this_crisis
March 31st, 2009 at 2:04 pm
My apologies for the off topics here Barry but these were just too egregious to let go
A Chrysler-Fiat combination would be the world’s sixth- largest by vehicle sales
They even mock us with the merger names
This next one explains itself. To have the audacity to print something like this just blows my mind:
Senior policymakers from the Group of 20 nations, led by those in Washington, are likely to agree this week to give their central bankers more power to ensure there’s no return of the type of credit crisis that has rocked the global financial system.
That is no surprise, experts say, because central banks are endowed with the skill and know-how to detect asset bubbles, and act accordingly. And for the most part, their role in stabilizing the current global recession has been applauded.
So let’s give the drug dealer more control over your kids in order to keep them from ODing next time
March 31st, 2009 at 2:41 pm
guidepostings – good call on 805. Care to call the downside target?
March 31st, 2009 at 3:55 pm
An entertaining comment on a Houston real estate blog:
http://swamplot.com/waiting-for-greenwood-king-to-drop/2009-03-31/#comments
Houston isn’t on the Index, apparently because the law here allows parties to hide sale prices to baffle the assessors. Don’t wanna have to pay for all these services and excellent roads.
March 31st, 2009 at 4:07 pm
I hate looking at this chart every month. Where I live, prices are not coming down too much, certainly not 19%. Wish they would so I could upgrade.
March 31st, 2009 at 4:13 pm
I wish that Case-Shiller didn’t lag by two months. It’s almost like reading stories about “Holiday shoppers not enough to save retailers”. I’m sure their methodology is great, but I just wish they would come out with fresher data.
It seems like a title company could probably provide better data on home sales than Case/Shiller does.
The other thing is that prices do not encompass the new home market. You have to consider volume, and if anybody is really interested in seeing where the market is going, they should really be looking at volume. That will tell you whether the bottom is in sight.
Oh, one more thing. There is really no national home market. Individual regions have housing markets. But the regions canibalize the markets of other regions. When California got hot, a lot of people went to Texas. The outflow of population hurt California and helped Texas. That’s not going to show up in the Index, but does matter.
I have some additional thoughts on my site.
http://realpropertyalpha.com/2009/03/31/ritholtz-on-caseshiller/
March 31st, 2009 at 4:34 pm
In Banff, that is called a triple Black Diamond ’slope’.
Or Upper Gravel face.
March 31st, 2009 at 5:33 pm
Extrapolate that second chart (I did a similar thing on the 100 year chart awhile back) and housing bottoms around 2015 if you are lucky. It is following the path projected to a tee.
March 31st, 2009 at 7:31 pm
In case anyone is still observing this thread, some graphics from Hussman are interesting. We may be past the subprime resets, but tha liar loans, etc are still to come. Scroll about 2/3 of the way down past the rant and to the topic “The Danger of Inaction”.
http://hussmanfunds.com/wmc/wmc090330.htm
March 31st, 2009 at 7:31 pm
Will T, thanks for your comment. I just picked up a 40+ year-old house as primary residence in the same area as that of your condo locale for 87% of original list price. I don’t consider it a bargain but sought a solid “buy & hold” non-PMI/escrow market (i.e., non-exurbia) plus below less liquid prices (1MM+) in this Texas market.
I consider it a “hunker down” play though I think Dallas & Houston will be awash with painful retail RE losses once some home sales volume dissipates after non-Texans finish invading, er, escaping, er moving here. Assuming energy languishes like it did in 2001-2004 or shudder, worse.
March 31st, 2009 at 8:20 pm
Mike:
Great link…the reset schedule from Hussman also supports a post-2015 bottom. I believe that has terrible ramifications as more and more home become under water. This is a vicious feedback loop.
March 31st, 2009 at 10:18 pm
one word – Doh!
March 31st, 2009 at 10:33 pm
RE: Reset schedule.
Barry had a post with a link to the Option ARM reset schedule maybe a month or so back. Subprime is basically over but it’s Option ARM and ALT A next. big time resets in those in 2010 and 2011.