Well, I asked for lower prices earlier, and that’s what we got:

Home prices continued falling at record paces, according to the Case Shiller Home Price Index.

Annual (-19.1%), quarterly (-7.5%) and monthly (-2.2%) data continue to show prices reverting back towards levels not seen for years.


March 2009 Case Shiller Home Price Index


As of the most data, prices have returned to 2002 levels; Will pre-2000 levels be next?


S&P/Case-Shiller U.S. National Home Price Index



Nationally, Home Prices Began 2009 with Record Declines
S&P, May 26, 2009


Category: 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.

60 Responses to “Case Shiller Index Declines 19.1% in Q1 ’09”

  1. leftback says:

    Fast forward to early 1990s levels… insolvent banks… CRE bust… mo’ bailouts… mo’ printing…

  2. franklin411 says:

    How about a snapshot of the dramatic turn in consumer confidence? =)

    I agree with your overall proposition that price declines in housing aren’t necessarily a bad thing. I love the whole CNBC mantra that “the economy can’t recover until housing rebounds.” Oh, come on! Why would the thing that killed the economy be what saves it?

    Last year, my friend was rooting for Hillary. She said that she opposed Obama because he didn’t have a plan to restore housing prices to the good old days (her parents were losing their home). I said I was sorry for her parents, but how did she ever expect people like us, who are likely to get jobs making $40k/yr to start (education ain’t the get rich quick scheme some make it out to be), ever supposed to get ahead if the starting price of a home in our area is $700k?

  3. Cursive says:

    The consumer confidence numbers prove that the green shoots propaganda has worked magic. Well, maybe just a higher level to short from….

  4. Mr. C. Cheese says:

    40 K to start and the houses in the da hood start at 700k………Sally, get the kids we’s going back to the trailer… 700k ain’t no place for us!

  5. Pool Shark says:

    Yeah Frankilin…

    The value of consumers’ homes will continue to fall ’till well into 2012, but at least they’ll feel real confident about it. ;-)

  6. The Curmudgeon says:

    There is such a thing as inflation, even when prices are declining, sorta like the dog that didn’t bark. It is happening right now with the housing market. Call it a second derivative inflation. It is when the pace of decrease slows due to massive infusions of cash. How massive? On the order of 80% of the cash for mortgages right now is appearing out of thin air, from the Fed’s printing presses. It will be roughly $1.5 trillion dollars before they’re through (for this go ’round…stay tuned for part second, third, fourth, etc.). And that doesn’t include the roughly $8 trillion of guarantees the Fed is on the hook for with Fannie, Freddie, Ginnie, the FHLB’s, etc., ad nauseum.

    This will, like before, end badly, which is itself a green shoot. When this fails again and dumbasses that tried to game it get burned again, perhaps then there will be a realistic re-pricing of housing such that fine folks like F411 can buy houses for their use as homes, and not as piggy-banks funded by the sweat of quasi-slave Chinese labor. But we’ve a ways to go before we get there.

  7. Cursive says:


    If you have returned to Minneapolis, please proceed to the edge of your driveway and camp there. Do not re-enter your home until this market co-operates. Thanks in advance.

  8. VennData says:

    I’d like to see actual housing prices displayed with the bid / ask format… and the yield, like they do in the paper with stocks, bonds funds etc.

    Yeah, yeah I know the yield’s negative, but that’s why I want it. So people see how unbelievable, freaking stupid they were to buy houses.

  9. Andy T says:

    The history of parabolic moves, like the one from early 1990s to mid-2000s, is for the market to COMPLETELY retrace the move. So, a move back early 1990s levels should not be a surprise.

  10. ben22 says:

    Why isn’t Philly in the Case Shiller? Does anyone know?

  11. some_guy_in_a_cube says:

    In chart 1, if 0% is truly the mean, then expect some serious mean reversion to kick in – look for a 2-3 year ride from these levels back to 0%.

    This jibes with chart 2, whose mean reversion still has along way to go.

    In housing, the bottom is in only if you are a real-tor, homebuilder or wall street shill.

  12. olephart says:

    ben22 Says:

    Why isn’t Philly in the Case Shiller? Does anyone know?

    Because W. C. Fields made out the list.

    “I was in Philadelphia once, it was closed.”

  13. Mannwich says:

    @Cursive: On the plane at Logan now heading home after a superb trip. Should I get off and stay a bit longer until reality hits the markets again? Could be a while though.

  14. Pool Shark says:

    “The history of parabolic moves, like the one from early 1990s to mid-2000s, is for the market to COMPLETELY retrace the move. So, a move back early 1990s levels should not be a surprise.”

    Not only unsurprising, but INEVITABLE:


  15. Jim C says:

    Pool Shark, since that graph is inflation adjusted, there are two ways (or a combination of the two) for the reversion to occur. One is further deflation of home prices. The other is inflation of everything else. I’d bet on the latter, but a combination is also a possibility.

  16. Cursive says:


    Glad your visit was good. Have a safe trip!

  17. Pool Shark says:


    I agree.

    But, like many on this site, I see massive inflation in our future… just not our near future.

    I think we’ll pretty well form the right side of that bell curve in home prices before the serious inflation hits.

  18. ben22:
    I don’t know, but Philly hasn’t been hit as hard as other places(at least foreclosure wise). That doesn’t mean that housing here is any more affordable. Because it isn’t. I’d like to know how people younger than 40 are able to afford to buy a house/condo here. I know I can’t.

  19. bitplayer says:

    More towns need to follow the example of Palo Alto (pop. 60,000). Simply issue $378 million in munis to rebuild your public schools, whether they need it or not. Voila! A floor appears under entry-level home prices in your community. In Palo Alto’s case, that floor is $1000 per sq. ft. for the first 1000′ of living space. $1 million may sound like a lot to pay for a 1940 tract home, but if it gives your kids access to world-class aquatic facilities…

  20. ben22 says:


    Yeah I’m very familiar with philly. I live in DE but am in the city a few times a week.

    One thing I have recently noticed in area’s around Addison St. etc. in the last few months are tons For Rent signs all around there and into Rittenhouse Sq. I think a lot of people are holding on for dear life right now.

    I had a client that lived in a very nice condo on mkt st. that just had an appraisal done that came back very close to what they bought it for in 2006 which I was really surprised by. Not sure what to make of any of that.

    I’m under 30 and bought a home 4 years ago in DE, that said, philly and DE are apples and oranges when it comes to costs of homes and cost of living and I bought a cheap townhouse.

  21. cvienne says:

    Tell me the logic of keeping houses artificially inflated when all it does in turn is keep PROPERTY TAXES inflated…

    I don’t care how much $$ they can print to keep interest rates low…In this day and age, you have to be able to put down 20-25%…Then, pay the HIGH TAX RATE off a HIGH MORTGAGE PAYMENT…

    I guess all the public companies out there are going to get all caught up in the groundswell of emotion and give all their employees PAY RAISES so they can cope with all the houses they want to move into…

    What does THAT say for profits?

  22. Mike in Nola says:

    Re: Philly
    Could be as simple as a lack of price info. That’s why Houston ain’t on it and it’s maybe the 4th biggest town in the US. Here, it’s so people can lie to the assessors. It also helps realtors keep up the talk of how Houston is not affected by the slump.

  23. Mike in Nola says:

    BTW, anyone looking at AAPL as a short in a couple of weeks?

    Big jump todayon upgrade by someone and there’s rumors of a new iPhone to be announced at the developer’s conference in two weeks. I suspect they’ll even wheel in Jobs to work the old magic if he doesn’t look too bad.

    Of course, the problem is finding people with jobs and house to buy them. A couple of Russian companies are facing huge payments to Apple for not meeting quotas.

  24. drollere says:

    the national housing market is bottoming, and prices will have firmed up nationally by this summer. they are already rising in several key markets, such as phoenix.

    whatever hysteria remains around the true value of mortgage based “toxic assets” will no longer be the hysteria that there is no market to price them but the hysteria of all banks forced by bad management to sell them.

    yes, many mortgages are still due to reset and many homeowners are losing homes after losing their jobs. but there is no longer the buyer fear that homes will continue to depreciate.

    permabears continue to snort that humanity has not suffered enough and theory is not proving true enough and … and hell is gaping under our feet. meanwhile, the eternal cycle of bubble formation turns on. how about that crude oil!

    ladies and gentlemen, this is last call for the housing bubble! last call!

  25. franklin411 says:

    Not every town has a world class university to keep a floor under the local economy and serve as an engine of innovation. But every town should!

  26. The Curmudgeon says:

    “prices will have firmed up nationally by this summer”

    Of course they will, or have already. It’d be hard to create $1.5 trillion dollars for the express purpose of artificially inflating housing prices and completely fail. I mean, how hard is it to print money?

    Or more pointedly, how hard is it to enter integers followed by zeros on the balance sheet of a government agency that thinks it has free reign to create as much money as it wants, and then to digitally transfer the money thus created to another governmental agency?

  27. JDinCT says:

    Anybody following the macro shares ETF on MEtro realestate prices?

    According to the article an imbalance on the LONG side is preventing the IPO from coming out.


  28. I-Man says:

    @ Curmudge:


    “Or more pointedly, how hard is it to enter integers followed by zeros on the balance sheet of a government agency that thinks it has free reign to create as much money as it wants, and then to digitally transfer the money thus created to another governmental agency?”

  29. Mike in Nola says:


    I think you are giving that statement about firming up based on money-printing too much credence. While the bottom end is getting there, the upper end is just starting to get hit with a combo of few move-up buyers, no financing on the high end, and a wave of resets and recast on jumbo and alt-a.

    Just because you have some vulture buying frenzies in places like Phoenix doesn’t mean it’s the bottom. The new bubble is rental property, but rents are falling as job losses continue. Many of the vultures may become carrion themselves if they are leveraged and the rent doesn’t cover the note.

  30. usphoenix says:

    @drollere: Are you a realtor?

  31. The Curmudgeon says:

    @Mike in Nola:

    “Many of the vultures may become carrion themselves if they are leveraged and the rent doesn’t cover the note.”

    That would be a “green shoot”.

  32. cvienne says:


    Franklin – I have a question for you…

    Can you identify the class of people who serve the lattes to, mow the lawns for, blow the leaves for, babysit the kids of, and otherwise clean up the mess after all the highly educated people who live in your idyllic university town of higher wisdom?

    Put a “face” on that if you would be so kind to indulge us…

  33. cvienne says:


    I’m ‘serious’ about that last question…

    It would be helpful to initiate a philosophical debate on the subject…

  34. Pool Shark says:


    You must have been one of those ‘consumers’ they polled in arriving at this morning’s “confidence” numbers.

    For housing prices to bottom this summer, the thick black line in that first chart above would have to go completely vertical.

    Not going to happen.

    Bottom = 2012 (if we’re lucky)

  35. Renting in Mass says:

    droller says “but there is no longer the buyer fear that homes will continue to depreciate.”

    What are you talking about? Why on earth wouldn’t they fear that homes will continue to depreciate?

  36. Onlooker from Troy says:

    And if they don’t fear it, they should. No doubt some will step in here and try to catch the knife. But many will regret it. The overwhelming evidence from non-biased (i.e. not the NAR) sources who have been on top of this from the start (e.g. CR, Dr. Housing Bubble, Shiller), says that we are 2-3 years from a bottom in housing, minimum.

    Cramer is wrong. Of course he’ll find some way to squirm out of his prediction, like saying he was just talking about the subprime, bottom of the market in the bubble states, like FL, CA. For all I know he’s already doing that.

  37. bitplayer says:

    @ franklin411

    But Stanford had the same, world-class reputation back when Palo Alto houses were affordable.

    No, the public schools are the big draw. Sure, you *could* rent and send your kids to Paly, but everyone knows that kids of renters don’t do as well in school.

    Palo Alto has two public high schools. Each has an excellent reputation. One has 1900 students, the other has 1750. $300 million is going to be spent to refashion these two “campuses,” one or both of which will soon boast the following new structures: media arts center, aquatic center, industrial arts building, additional classroom buildings, $12 million gym, $4 million building for “world language programs,” performing arts center, student activities center, and theater.

    Of course it’s insane. There isn’t a liberal arts college in the country that could afford to go on such a construction binge. But why quibble? $5000 (per citizen) is a small price to pay for uninterrupted home price appreciation. And it works!

    The sooner every other municipality in America realizes this, the sooner we can get our glorious economy off the ropes. The children are our future!

  38. cvienne says:


    Franklin continues to “duck” me my friends in a square debate :-(

    Let me just give you an anecdote on consumer confidence…

    1. I own my house OUTRIGHT…(I paid cash for it just 6 months ago)
    2. I have investments in other asset classes
    3. I am a consumer (yet a very frugal one), I buy things here and there
    4. From an economic standpoint, it would be VERY DIFFICULT for me to get hurt either way because…

    A. I don’t RELY on a job for income
    B. My house is paid for
    C. I have adequate liquid cash

    - If they want to INFLATE housing prices to a new bubble (great: I’ll just sell my house again like I did in ’06 and cashed in)
    - If they want to DEFLATE the economy then the house I just bought goes down in value but I don’t care, I paid cash for it…meanwhile I’m “net short” equities, so I profit more there
    - If the actions put my job in jeopardy…WHAT JOB? I grow food and will therefore always eat

    So you should ask ME what my CONSUMER CONFIDENCE is…After all, I can give you an objective opinion because whether BO & BB want to inflate or deflate, it doesn’t effect me one bit…

    My consumer confidence level…VERY LOW (but it’s mainly because I feel sorry for all the other poor bastards out there who are kidding themselves with “green shoots”)…

    Come on in…the water is fine!

  39. Bruce N Tennessee says:

    franklin411 Says:

    May 26th, 2009 at 10:15 am
    How about a snapshot of the dramatic turn in consumer confidence? =)

    Great. However, it is based on feelings, not hard data…kinda like investing on hope…


    5/26/09 2 am Germany:

    capital investment down 8.6%
    exports down 9.7%


    just take a look…this is hard data…not a feeling.

    And the bondholders rejected GM again…BK this week.

    Franklin, it’s not that we don’t want a recovery…but you seem to be basing your thoughts on the most nebulous of feelings/ideas/ wishes….difficulties like CRE, credit card debt, continue falling of house prices, rising gas costs, and so on and so on….you have one engine the Obama stimulus…maybe you are right, but if you are only going to make 40/k a year as you state, you better be plenty sure before you jump in with both feet.

    just my 2 cnts..

  40. The Curmudgeon says:

    “Of course it’s insane. There isn’t a liberal arts college in the country that could afford to go on such a construction binge. But why quibble? $5000 (per citizen) is a small price to pay for uninterrupted home price appreciation. And it works!

    The sooner every other municipality in America realizes this, the sooner we can get our glorious economy off the ropes. The children are our future!”

    And imagine, good ol’ Abe Lincoln got it done by the light of a candle, with only a few books (remember those?) as a resource. My county just did a Palo Alto type school bond–a billion dollars to build or re-build schools. Beware Palo Alto. My county is also about to go broke, and it can’t even use the school bond money to save itself. But a bunch of contractors that happened to also be political contributors made off well. At least until they all did the perp walk, along with the politicians.

  41. hopeImwrong says:

    @ Andy 10:47 “The history of parabolic moves…”

    On an inflation adjusted basis (not even using shadow stats inflation numbers, just using the gov’t’s) We have retraced to about 1995 levels, which is where it seems the parabolic move started.

    I kind of hope I’m right.

  42. cvienne says:

    @Bruce in Tn

    What Franklin411 REALLY wants is one simple thing…STUPID SIMPLE THING but nonetheless “simple thing”…


    He wants the economy to suddenly do a miraculous about face so that he can credit his idol OBAMA for being the engine of ushering in this new era…

    Franklin is NOT ALONE…In fact he is just one of many ‘sheep’ with this mentality (and BHO is their shepherd leading them to the slaughterhouse)…

    Franklin…let me let you in on something pal…take out advice…STEP OUT OF LINE…It’s not too late to get yourself into the “shearing” line instead of the line that’s going to turn you into a pork chop dinner…

    Nobody here is really trying to bash Obama (at least I speak for myself)…The macro situation is far greater than HE or anyone else has power to control…Trust me that if McCain had been elected, we’d still be talking about the same things (maybe have a few less taxes to pay in the future – but basically the same problems)…

    What most people in this forum would like is for your boy Obama to just take his hands off the wheel…When you’re in a hole…STOP DIGGING…That is the sign of a truly intelligent person…

    Don’t worry Franklin…Nobody is going to “stone” your boy if things don’t start getting better soon (well – maybe SOME will, but those people would be out of line)…Nobody is going to “criticize” you either when things don’t turn out so good and you are the only one left standing and proudly proclaiming “I VOTED FOR HOPE & CHANGE”…

    Let the glacier grind the rock down…It’s time to be humble…It’s time to be small…

  43. Pat G. says:

    Imagine where home prices would be without all the governmental intervention? Probably, properly priced. Regardless of their efforts, home prices will get there on their own sooner or later.

  44. cvienne says:

    @hopeI’m wrong

    I’d argue that the PARABOLIC MOVE started with Reagan in the early 80′s with defecit spending…

    Since then we’ve been on this fantasy carousel of trumped up economic fantasy…

  45. hopeImwrong says:

    Green shoots? What green shoots? I want greenhouse shoots!

    I’ve been venting freon all day to get a warmer climate to lengthen the growing season, and cause my garden to grow faster. I also exercise a lot to produce more CO2. Please help, as CO2 and warm weather benefits crops (they grow faster).


  46. Bruce N Tennessee says:

    One last thing about hard data today:


    5/26/09 5 am

    for the Eurozone,last month industrial orders dropped .6%…but economists expected a 1% rise this month…what did they get? Uh, another .8% drop…orders are a leading indicator and not a feeling…Franky the Eurozone had another severe drop in orders…what does that “feel” like? I don’t know, but it is a FACT…..

  47. zyzy says:

    well, since Bush pulled “go spend” banner and, apparently, it worked ( for a 3 years ). I don’t see how this time this group weed smoking session won’t.
    It is my believe that for market to reverse (down) some terrible news(!) should arrive.
    Don’t forget “don’t’ bet against American economy” etc. Plus ( i believe) majority of ppl are optimists driven by greed. I think that’s the major reason why i’m losing money :)

  48. hopeImwrong says:

    Second derivative? What second derivative. Just look at the integral of the unemployment numbers, not the second derivative (since no one seems to be able to find a job once they are unemployed).

    Second derivative my butt. Just a way to call a negative number a positive number. What a joke.

  49. R. Timm says:

    These are nominal numbers. Using real numbers it is apparant that prices are currently near historic norms for Case Schiller. Price/Rent and Price/Income are back to historic norms. The question is will prices overshoot to the downside?

    I expect high single digit inflation in 2011 and beyond based on monetary expansion. This will get real estate prices on an upward trajectory again in a hurry and we’ll likely have negative real interest rates for a period of time.

  50. cvienne says:

    @R Timm

    Great…another bubble…can’t wait…

  51. Andy T says:


    I’m not a big believer in “inflation adjusted” (insert asset here). Asset prices going up IS the measure of inflation, and vice versa. Not to go off on a slight rant here…..

    But, there is NO SUCH THING as inflation adjusted Gold prices….or, inflation adjusted oil prices…or, inflation adjusted house prices. The rapid rise of all of this “stuff” was the inflation….

    And, on top of that, I suredly wouldn’t rest any investment thesis on the back of government manipulated number like “inflation.”

    Though, I get you’re point…prices have come down pretty hard. I would suggest, however, doing a little research into “real estate” cycles. There are some studies that have shown real estate moves in 16-18 yr cycles, so if we saw the peak in 2007, then it could be 2015-2016 before the nadir in the real estate cycle.

  52. danm says:

    permabears continue to snort that humanity has not suffered enough and theory is not proving true enough and … and hell is gaping under our feet. meanwhile, the eternal cycle of bubble formation turns on. how about that crude oil!

    Actually, oil price goes up with every decline in US$… Canadian dollar has gone from 79 cents to 89 cents in the last few weeks.

    US is losing buying power.

  53. hopeImwrong says:

    Andy, I agree with that. I was off topic (thinking of the S&P). I should have read the thread more carefully. If the s&p is to retrace the bubble, where would it end up?

  54. bitplayer says:

    @ Curmudgeon

    I suspect the realtors are a driving force also. Five of the bigger RE agencies employ 900 realtors in their Palo Alto, Menlo Park and Los Altos offices. That’s one “real estate professional” for every 130 residents. Seems a tad high?

    “It’s like Lenin said, you look for the person who would benefit, and, uh…”

  55. arbitrader says:

    Andy T,

    Your statement about the real estate cycle assumes that the time from top to bottom equals the time from bottom to top. In most cycles this is not true for a couple reasons. First long term prices always march higher (unless the society colapses) so the up swing has a larger price move than the down swing. Don’t believe that. Go look up the prices for any asset class, 25 years ago, 50 years ago, 100 years ago, They will get drastically smaller the farther back you go. Second As you can see on most asset charts, prices typically grind higher somewhat slowly, then at the end there is a spike to a blow off and then a crash. The grinding is the majority of the cycle, the spike and the crash can be quite short in relation to the rest of the cycle. Then you can may sit and base for a while and eventually start the grind higher again. But that doesn’t mean that the bottom occurs 1/2 way between tops. Usually the bottoms occur not too far past the tops. Could be a few years but likely not 1/2 of the cycle.

  56. cvienne says:


    That is a good description of CYCLES PAST…

    However, I’d offer the caveat that THIS PRESENT CYCLE was the result of massive leverage 9which started all the way back in the early Reagan years)…

    Therefore, I’d start back in 1982 as a “familiarity” base for any new trend which may emerge…

    Clearly we are not there yet…I don’t imagine we hit bottom until late 2011…

  57. cvienne,

    you fixin’ to be milking Cape Buffalo, anytime soon? (:

  58. Swampfox says:


    You assume:
    1) All of the good work done by a local university stays local.
    2) All of the good graduates produced / educated by the local university stay local.

    In many towns, neither 1 or 2 are true.

    Finally, you, like many in the university world seem unaware that the university system is about to be ripped apart in coming years as web-based learning take over.

  59. Andy T says:


    I understand all that. To add on…my research suggests that time cycles are better for determining “bottoms” rather than tops. i.e. if there’s an 8 or 9 yr cycle in a commodity (very common), then the cycle is better at calling “buying opportunities” when they’re due, as opposed to suggesting that every 8 or 9 yrs you can nail a top in the cycle. That doesn’t work so well, so that supports what your stating for sure.

    I would also agree with you that the first move will be the biggest move on a chart and now we could see just years and years of a slow crawl lower and a flat line. We’ve probably see the brunt of the price move lower in absolute prices, though the next 20-30% down from these will levels will not feel so great either. I’m suggesting it could be a few years before we ever seen a real trend change higher in real estate prices.

  60. cvienne says:

    @Andy T

    I agree with your “cyclicality” thoughts (especially with regards to average term, 8-9 years).

    Probabaly the reason the “bottom’s” are more consistent than the “tops” is that by the time we reach a bottom, every artifical POLICY measure has already been thrown at a problem, found to be useless, and finally abandoned…

    Instead, at the top, the measures to ‘keep the party rolling’, are met with enthusiam and suck a lot of people into acting inunusual ways which make the actual point in time of the top harder to determine…

    With regards to the S&P (because one can see it on a chart more clearly than housing prices, and because of BID/ASK prices and daily high/low aggragates)…I “still” believe that the TOP to this market was the few days before February 27, 2007 (not the “artificial” rallies in July and later that year which were fueled by very aggressive Fed intervention in the midst of the bank problem bubbling to acknowledgement in the mainstream, coupled with the proximity to ALL TIME highs…

    I don’t think the S&P would have behaved that way otherwise…