December 2011 Case-Shiller Home Price Indices showed that 2011 ended at new index lows.

The National Composite Index fell by 3.8% during Q4;  year over year changes were down 4.0%. The 10- and 20-City Composites also fell by similar amounts, falling -3.9% and -4.0% versus December 2010, respectively.

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Click to enlarge:

more charts after the jump


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Source: S&P Indices

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.

26 Responses to “Case Shiller: What Housing Bottom?”

  1. Expat says:

    As we are now much closer to a bottom than we are to the previous deliciously frothy high, I am starting to wonder how pundits and other MSM wankers will deal with rising prices when housing finally turns in three to five years (maybe longer). Will they start saying that housing is a drag on the economy because it is getting expensive? Will they talk about dropping affordability? Will there be calls to “do something about these rising prices”?

    Or will we hear the same crap we heard from 2002 to 2007? Will David Lereah get his halo back? Will Arizona desert land once again be the new black?

  2. Init4good says:

    Prices still going down. New housing starts likely bottomed.

    Price bottom Still couple of years away imo.

  3. flocktard says:

    I find the scrutiny of these numbers a bit overdone.

    First, year over year is not so hot, but to get in a lather over a 1.1% decline on a 10 or 20 city basis from last month is a bit much.

    Secondly, for the umpteenth time: “all real estate is local.” Some parts of this country aren’t going to recover for a long, long time. Others, like New York and environs, aren’t doing bad at all. If you want to merge all of these diverse areas into a single figure, you’re missing the picture. I would no sooner expect all parts of the country to recover equally than I would to expect all stocks to go up by the same percentage in a bull market.

    The 10 city index includes Vegas and the Miami-Ft. Lauderdale-Pompano area. Lots of luck getting that datum off it’s bottom.

  4. MikeDonnelly says:

    2006-2011 all 6 of these years housing was a net drag on GDP, I think 2012 has a real chance of being a positive contribution however small

  5. Ted Kavadas says:

    Lately there have been a lot of professional forecasters indicating that the residential real estate market is very close to, or at, a sustainable “bottom” with regard to prices.

    For a variety of reasons I don’t believe the residential real estate market is at a “bottom” in price, when viewed on an “all things considered” basis, including overall economic conditions. It should be noted that ever since the peak of residential real estate prices, there has been a continual flow of forecasts, many sophisticated, predicting that the “bottom is in” with regard to home prices, only to be proven wrong.

    For those interested, my blog post that summarizes the latest Zillow Home Price Expectation Survey, which includes the multi-year home price forecasts of 100+ forecasters, as well as a summary of my thoughts as the future of home prices:

    http://economicgreenfield.blogspot.com/2011/12/zillow-december-2011-home-price.html

  6. Low Budget Dave says:

    In my city, there are at least two distinct real estate markets, maybe more. Houses under $150 do not follow the same trends as houses above $150K. Recently, one market was declining while the other was rising.

    If you add them up and divide by two, you would say that the market is flat.

  7. louiswi says:

    Zillow Home Price Expectation Survey and the Case-Shiller Index have one thing in common. They provide no value to any discussion. All real estate is local. Some areas of the country already are doing well, some never did poorly and some will never do well.

  8. crunched says:

    I don’t understand. Anthony Scaramucci said we were finally in the midst of a housing bottom on Fast Money last night and that it was time to buy. Carter Worth even showed us the chart where the XHB was telling us the bad times are finally behind us. They seemed so sure. So honest, even. I’m confused…

    My thoughts on their comments are always the same: Are they just really bad at their jobs, and their ability to read markets? Or are they just lying to the public for the sake of their own books and the greater fool theory?

    Either answer points to how pathetic CNBC is.

  9. gordo365 says:

    That 1st chart looks like an EKG readout of a very sick heart…

  10. b_thunder says:

    What Housing Bottom? – the one that Cramer has been shouting about since June 2009!

    But AAPL is at all-time high!

  11. NoKidding says:

    All real estate is local…

    Except for almost all transactions in the past few decades.

    “Ninety-five percent of existing mortgage creation over the past 12 months were government guaranteed.” -B Gross 2011

    The Fed’s interest rate targeting and MBS purchases are not effecting national RE prices? Really? Really really?

    Flocktard indeed.

  12. brianinla says:

    All real estate is local…a worthless argument. It could be applied to a stock index like the SPX 500. What’s the point of an index if each stock is local?

  13. ironman says:

    Median housing prices show the same overall pattern – from December 2011, it looks like another 10-12% to go before house prices have the same level of relative affordability as they did in the 1990s.

  14. PDS says:

    this is odd BR….didn’t you post a Bianco article the other day entitled “Signs of Life in Housing Market”???

    Now this! “what housing bottom”???

    no wonder everyone is confused…..including the capital markets led by the disconnect between stocks and bonds…..UST 10 year yield dropped below 1.9% this AM….signifying econ weak!….but stocks up YTD saying econ stronger???

    which is correct?….bond market and Prof Shiller of course….when it comes to US econ….u can’t make chicken salad from chicken $@#&

    ~~~

    BR: Two different opinions

  15. wally says:

    Given the approximate nature of the numbers and the small percentages involved, this sounds like quibbling to me. We’re near a bottom; calling that is an inexact exercise… so attempts at precision are hubris.

  16. slowkarma says:

    I have houses in three radically different metro areas in the US, and the housing markets are also radically different. In one, a state capital, the lower and middle income housing never declined much, because it’s supported by government salaries that didn’t shrink much, and by people who don’t move much. But there’s also a large upper-bracket housing segment, mostly second homes supported by wealthy out-of-state people, and that market’s really been hammered, and appears unlikely to recover for several years at best.

    Another market is a large, conservative, but relatively affluent Midwestern city, where upper-bracket housing appears to be recovering — almost spiking — possibly, and this is purely speculation, because of the wealth effect created by the stock market surge, along with several years of pent-up demand.

    The third city (all right, it’s Los Angeles) is all over the place. You see people taking big hits on houses in Beverly Hills, but also people turning big money on houses in Beverly Hills. In this case, it’s not that all real estate is local, it’s that all real estate is house-specific. That also seems to be the case even in less-desirable neighborhoods in the LOs Angeles basin. East of Los Angeles, the “Inland Empire” is still a housing wasteland.

    So, I think when you look at these indexes, you really have to focus on the word “index.” They are averages, but there’s nothing about this housing market that’s average. You literally cannot tell, going from one place to another, what a specific house might be worth. If we avoid a recession, which I still think is doubtful, we may look back and see a bottom for significant parts (but not all) of this housing market. If we get hit with another recession, and the stock market tanks, I think we may be in for further declines in the averages.

  17. tsetsaf says:

    Just spoke with a buddy who “stole a house in short sale” for 30% off the local asking price (So Cal Ventura County). He was being cryptic about the price since he knows I am very skeptical. Finally beat it out of him and he still paid what is equivalent to the 2005 going price. As long as interest rates are at zero we will not see a real housing bottom. The first comment by Expat asks what will people be saying when we are finally at a bottom? The answer is “Real Estate is a terrible investment that no one should be getting in to”. I still have UPS delivery drivers telling me they are buying foreclosures out in Santa Clarita; sounds like that old adage about stock tips from shoe shine boys.

  18. ashpelham2 says:

    So, since housing seems to be back at mid-2002 levels, and I bought my house not long after that, I should expect to be able to get the same price I could have paid in 2002? Not…..Like every bubble which is still deflating, no one is interested unless they are speculating. Speculating got us into this trouble to begin with. A wise investor with a lot of cash and long time horizon should buy RRE, but for those of us homeowners, we should either stay put and not sell into a loss now, or send the keys to the bank. With rising commuting (gas) prices now and into the foreseable future, who wants to own a home that requires a commute at all? I can see city home prices in thriving, healthy center city locations doing just fine, and even appreciating. Hard to believe the middle class burbs and exurbs will ever be the same.

  19. Keith Jurow says:

    Flocktard,

    I write Minyanville.com’s Housing Market Report and agree that real estate is local. However, you and many others have been totally fooled by what’s been going on in NYC housing markets.

    Try this: As of the end of 2011, there were more than 165,000 seriously delinquent mortgages not yet foreclosed in NYC. This comes from reliable data from the NYS Dept. of Banking. Including investor-owned properties, the number swells to 200,000+. It’s so enormous because the banks have not been foreclosing for more than three years.

    What do you think will happen when the banks finally begin to foreclose and put them on the market? Simple — prices will collapse. The situation is just as bad in Nassau and Suffolk Counties on Long Island.

    No one else is doing the kind of research that enables me to find out what’s really going on in major housing markets. You can check out my articles and reports at Minyanville or BUSINESS INSIDER.

  20. Robespierre says:

    The bottom will be in when the price of a house represents a reasonable % of buyers income (after a %20 down). Also consider that the chances of removing the interest deduction on mortgages on second homes (and may be primary homes?) after the 2012 election is very likely making the “finding” the bottom very difficult. I hope for a day when there are no more TV shows about houses (flipping, renting, house virgins etc, etc) to really know that we reached bottom

  21. theexpertisin says:

    Robespierre..

    You’re right on regarding the housing shows on TV.

    Real restate productions you mention feature incompetent boob real estate agents poorly representing buyers, flippers without any business plan paying close to retail for rehabs and rookie home buyers falling into one sales trap after another.

    I would like to see followup shows three years hence featuring all the bankruptcies, flops and foreclosures these shows featured as wonderful investments during their production runs.

  22. flocktard says:

    @ Keith Jurow

    No doubt there are plenty of foreclosures to process. The same people processing the backlog in Henderson, Nevada are processing the ones in Brooklyn.

    However:

    -165k units for a city the size of New York is not as large as it seems.
    -I have friends and associates looking to buy foreclosures for investment and rental income. They get outbid every time they show up, and walk away cursing. There’s demand out there for these properties.
    -The vacancy rate in Manhattan is less than 1%, and the rental market there and in the outer boroughs is strong. With the banks refusing to lend to even qualified buyers, there is a strong undercurrent of demand for these properties.
    - The peak to trough pricing in the NY Metro area was puny compared to the 60% levels of the “sand states.”

    If they threw 10,000 properties on the market in the next month, they would be gobbled up. People aren’t stupid- they know this area will ALWAYS have value.

  23. gman says:

    “The bottom will be in when the price of a house represents a reasonable % of buyers income (after a %20 down).”

    Calculated Risk has Real cost of ownership v. renting approaching 30year lows.

    Typical, love home ownership in 2007. Have rents go up 20%, home prices go down 30% and financing costs get cut in half..”I’ll be a renter for the rest of me life”!
    Love the sp @ 1500..hate it @700!
    .Bunch GD chimps running around this country.

  24. Expat says:

    The average length of time someone owns a house is six years. Houses are not investments; they are temporary lodgings which require an enormous capital commitment.

    Why would investors buy houses now when we are still ten to fifteen percent from the bottom and in a ZIRP environment? I would rather buy a house after the market has turned and with mortgage rates at reasonable levels, even high levels. Frankly, I would rather buy as an investment with rates at 20% than at 4%.

    But fundamentally, all the talk about investors, auctions, super deals on REO is just crap. A national (yeah, yeah, it’s all local until you aggregate it in which case it’s national) housing market depends on income. US incomes cannot support the housing market. US debt (personal, corporate, and national) cannot support another debt-fueled housing bubble.

    In any case, discussing housing, like religion and Apple, makes people irrational. Think back to the arguments used to justify higher prices during the bubble and ask yourself what today’s equivalents are.

    Gman, the cost of ownership vs renting may be interesting but it misses the point. If you cannot afford to buy at 30 year lows, then what difference does it make how renting compares? If an airline offered you free airfare if you flew their 747 for them, could you do it? Gosh, do you mean to say you would turn down free airfare just because you don’t know how to pilot a jumbo jet! GD Chimp!

  25. Keith Jurow says:

    Flocktard,

    You sound pretty sure of yourself. How much research have you done on NYC? I spent three months researching my 30-page NYC Housing Market Report.

    So you think 165,000 seriously delinquent owner-occupants is not large? That does not include investor owners nor vacant properties. My best guess is a total of perhaps 225,000 or more. Most are sitting with the owners laughing at not yet having been thrown out. Because the servicing banks haven’t been foreclosing since early 2009, a house listed at $450,000 in Queens (where I grew up) sells for $90,000 in Phoenix. Think about that one.

    If your investor friends buys a foreclosure or short sale in NYC now, he’ll regret that for a long time.

  26. ezrasfund says:

    All real estate is local. Queens is about as far from Manhattan as it is from Phoenix in that sense.

    One problem with real estate is the total cost of ownership. Mortgage rates may be rock bottom but property taxes and maintenance costs are only headed up.

    Another factor for the average home buyer is the required 20% down. Most first time buyers can’t earn it, and people trying to move don’t have sufficient equity to cash out.

    Then ask about a potential home buyer’s total financial picture. Buying a house means a very leveraged investment, usually greater than net worth, in an illiquid asset with very high transaction costs. At least the neighborhood has good schools, I hope. So if you think you or your partner might be laid off renting is not such a bad idea.

    And…with all of the McMansions and vacation home built over the last decade I would like to see a chart of sq ft of residential real estate per person. It’s not feeling too crowded yet.

    Of course if you know where the next boom town is (Manhattan, Palo Alto, Bismark ND?) that would be the place to invest.

    So maybe we are near the bottom. The more important question is how long will we stay here. Our story has largely been foretold by Japan’s experience, and real estate there has been sitting near the bottom for a long time.