Case Shiller: Home Prices Fall More Slowly
Home prices fell less than they had been in August, according to Case Shiller. The Index shows a 7th consecutive months of improved readings in these statistics, beginning in early 2009.
By improved, prices continue to slide year over year, but at a slower rate. Monthly prices show modest gains.
Year over year, the 10-City and 20-City Composite Home Price Indices declined 10.6% and 11.3%, respectively, in August. The indices gained 1.3% and 1.2% from July.
Note that Goldman Sachs estimates that the US Government interventions and bailouts have pushed housing prices 5% higher.
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Other charts after the jump.
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Source:
Home Prices Continue to Improve
S&P/Case-Shiller Home Price Indices, October 27, 2009
http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/2,3,4,0,0,0,0,0,0,0,0,0,0,0,0,0.html
S&P/Case-Shiller Home Price Indices PDF
Uncle Sam Adds 5% to Prices of Homes, Goldman Says
James R. Hagerty
WSJ, October 24, 2009, 9:11 AM ET
http://blogs.wsj.com/developments/2009/10/24/uncle-sam-adds-5-to-prices-of-homes-goldman-says/
October 27th, 2009 at 10:02 am
I despise this index.. completely open to misinterpretation.. how about price per SF? home prices are falling and supply continues to outpace demand. And, then there is the matter of unemployment; usually a job is a pre-requisite for a mortgage.
October 27th, 2009 at 10:27 am
From what I understand of that index it is an apples to apples comparison. So the shift in sizes of homes that sell is compensated for. Also any seasonal shifts are going to be minor (not that I think prices have much of a seasonal change anyway). The Y-O-Y change number will not give you the best picture of current trend, and its second derivative is realy tricky to use. I prefer the actual index number. We have clearly had stabilization and a slight reversal in home prices. Other data suggest that this may only apply to the low end (where investors and first time homebyers are fighting to pick up a dwindling inventory). How much of this minor price increase is due to the tax credit is unclear. It also remains to be seen how much negative effect the next wave of resets will have on the prices.
October 27th, 2009 at 10:34 am
ot – Anyone want to wager that insiders got a hold of the consumer confidence numbers around 11:00am yesterday? I believe I have seen this happen other times. JMO
October 27th, 2009 at 10:44 am
Absolutely no stabilization or reversal of home prices in my southern california beach city.. homes still sitting on the market after 2 years and multiple price reductions.. however, i do see that one 5000 sf home listed at 3.9 just went into escrow.. (that one began 2 million higher a few years ago..)
October 27th, 2009 at 11:04 am
was talking to the guy that heads up our home services program for the fortune 500 i work for. he primarily intermediates for employees looking for mortgages and relocations. he tells me its very very difficult to get mortgages for people. in addition the coop market here in the NYC area is at a virtual standstill since most boards are not allowing more than 30% FHA loans. no surprise to many of us here but without FHA soaking up the mortgages from the lenders the housing market would be DOA.
October 27th, 2009 at 11:04 am
http://finance.yahoo.com/news/Oct-consumer-confidence-slips-apf-3163576114.html?x=0&sec=topStories&pos=main&asset=&ccode=
CHICAGO (AP) — Americans’ confidence about the U.S. economy fell UNEXPECTEDLY in October as job prospects remained bleak, a private research group said Tuesday, fueling speculation that an already gloomy holiday shopping forecast could worsen.
Unexpectedly…not expectedly..expected-not…Inexplicably…Surprisingly…Confusingly…incomprehensibly..really extraordinarily…
..didn’t like those? ok…
fell shyly…fell coyly..fell with abandon….fell in the well…fell and couldn’t get up…fell although the writer knew they might….in one fell swoop…fell hellishly…fell crushingly….
I just don’t know what would take the place of that word, do you?
B in T
October 27th, 2009 at 11:08 am
May be this is why people irritate with Goldman bonus payouts.
http://www.bloomberg.com/apps/news?pid=20601109&sid=a7T5HaOgYHpE
October 27th, 2009 at 11:09 am
I always heard about “stickiness” in prices during the tech boom. Lots of people didn’t want to sell their stocks because they were “worth” more than they paid, even though they were trading much lower. I think if you take that effect times 100 and you get the stickiness of housing prices. Right now, it’s essentially a buyer’s strike in many areas. I live in Boston and would like to buy sometime in my lifetime, but not at these freakin’ propped up prices. My wife and I make much more than average (even for Boston), and save about 40-50% of our gross income and we’d still have to leverage to the hilt just to buy something average here. Apparently, most of the population is much less averse to debt than we are…
HCF
October 27th, 2009 at 11:10 am
@Bruce: To exactly whom was it “unexpected”? Our royal masters Washington and NY?
October 27th, 2009 at 11:16 am
Goldman Sachs
The deal contributed to the more than $14 billion that over 18 months was handed to Goldman Sachs, whose former chairman, Stephen Friedman, was chairman of the board of directors of the New York Fed when the decision was made. Friedman, 71, resigned in May, days after it was disclosed by the Wall Street Journal that he had bought more than 50,000 shares of Goldman Sachs stock following the takeover of AIG. He declined to comment for this article.
The public got a financial water boarding. This is the insider information scandal that needs to be investigated.
October 27th, 2009 at 11:22 am
It is rather past time that we re-think the paradigm whereby increasing home prices is good, decreasing prices is bad.
We certainly never collectively consider that increasing oil prices are a good thing.
Ironically, the two are related. Oil prices rises are a direct consequence of Fed manipulations intended to put a floor under housing prices.
Here’s the deal:
Home price adjustments such that real demand (not illusory, temporary demand fueled by money-printing) and real supply at least have a chance at reaching equillibrium is the “good” we should be seeking. Whether that means a higher or a lower price should be immaterial, so long as the market-clearing mechanism that is “price” is allowed to function.
October 27th, 2009 at 11:24 am
Any idea on Integrity of BB. Is he corrupted like GS/ politicians?
October 27th, 2009 at 11:29 am
Let’s examine the other side of this. With all the stimulus out there wouldn’t you think these reports should not only be expected but should be better than this? Remember, the true way to track housing is through the jumbo market. There’s no interference there by the government, nothing tainting the numbers. And you can see how awful the housing market truly is without the noise.
October 27th, 2009 at 11:34 am
Mannich:
Your UNEXPECTED reply to my post was appreciated.
B in T…
(say, I could get into this headline writing thing…who knew?)
October 27th, 2009 at 11:55 am
>>It is rather past time that we re-think the paradigm whereby increasing home prices is good, decreasing prices is bad.
that’s the way the game has been set up and why there are massive ‘incentives’ from the government to support it. think about it. when you buy a property you are making a major investment in a particular area. real estate being highly illiquid also ensures you’re in it for at least a while + the high transaction cost of 4-6% usually means you aren’t going anywhere until you can make that up.
costs to maintain the residence are massive. home improvements/replacements, service fees and the like extract major cash from your pocket and get it working into the local economy. taxes and fees generated from home ownership to the local, state and federal governments also extract major $$$ from your pocket. property taxes, real estate transfer taxes, sales taxes, school taxes, variance fees, environmental compliance fees to name a few. banks make a killing on all that interest you’re paying which is 3x the original loan price over 30 years.
and what do you get for being part of this lovely process? a mortgage interest and property tax deduction on your taxes. this is great when you owe a lot but gets far less attractive as you pay off the principal.
October 27th, 2009 at 12:27 pm
Curmudgeon
My thoughts exactly. Celebrating the fact that we’ve thrown billions of taxpayer money at the housing market to prop it up and not only prevent it from rationalizing prices but actually (ostensibly) turning prices back up making them more unaffordable, is just crazy talk. Of course it’s all about protecting the banks, the housing and realty business, and homeowners who paid too much for their houses. But at the expense of all others.
Insanity that’s celebrated, even by some of those who hurt by it but are unaware of the true ramifications; due to their swallowing of the propaganda spewed by the govt and the MSM.
October 27th, 2009 at 12:33 pm
A huge number of Boomers who were counting on their payed off homes and social security to take them through retirement, will be very angry if housing falls substantially below current level. Do not expect politicians to back away from supporting house prices – there is a lot more than bankrupt finaincial institutions and pension funds on the line.
October 27th, 2009 at 12:44 pm
Homes have turned into investment grade assets. No longer are they places to live and raise a family they are now wholly desired as financial instruments to increase wealth.
Hence, the government’s concern regarding the manipulation of interest rates and tax deductions. After all wealth must be managed and monitored.
The wonderful world of Homer Owners Association reinforces this notion. With these arrangements you can be fined or even worse if your child leaves his bike out overnight or your wife plants the wrong type of tree. Heaven forbid should someone else’s nearby financial wealth engine be damaged by these dastardly deeds.
October 27th, 2009 at 12:52 pm
[...] August Case-Shiller home price numbers show a modest month over month gain. (Calculated Risk, Big Picture, Curious Capitalist, Free exchange, [...]
October 27th, 2009 at 1:40 pm
“Homer” Owner’s Association? Captures things perfectly. Not that I don’t love Homer Simpson. He’s too often a pretty fair reflection of me.
October 27th, 2009 at 1:47 pm
Duh!
Ever since I turned 45 my eye don’t focus. I am either wearing contacts and reading glasses or my nose is against the screen i.e. I can’t type.
October 27th, 2009 at 2:02 pm
@Curm: I think he’s a pretty fair reflection of many of us.
October 27th, 2009 at 2:31 pm
Its Me…Don’t feel bad…same here. I can only see the computer screen because it sits far enough away from my eyes.
October 27th, 2009 at 3:50 pm
If all of the construction that has purportedly stopped during this downturn has truly “Stopped”, then we should be seeing quite a loss of new homes on the market. Not that this can make up for what was built and unsold, and what was bought but not paid for.
Perhaps with continued weakness in new construction, equilibrium might be approached…
October 28th, 2009 at 1:58 pm
It really does depend on the city and the coast that you’re on. Greater Los Angeles, as a whole, saw a 6.4% increase in median price through the Realtors’ multiple listing service data from August to September. While year-over-year is still showing a 13% decrease. These national market stats are up at http://www.mlscloud.com.