Click to enlarge:


With the latest Case Shiller data out, look for the usual confusion between annual seasonal improvements and the regular


“Home Price Indices data through March 2012 showed that all three headline composites ended the first quarter of 2012 at new post-crisis lows. The national composite fell by 2.0% in the first quarter of 2012 and was down 1.9% versus the first quarter of 2011. The 10- and 20-City Composites posted respective annual returns of -2.8% and -2.6% in March 2012. Month-over-month, their changes were minimal; average home prices in the 10-City Composite fell by 0.1% compared to February and the 20-City remained basically unchanged in March over February. However, with these latest data, all three composites still posted their lowest levels since the housing crisis began in mid-2006.”


Note that the table of Metropolitan regions is still showing composite year iover year price decreases:

Source: S&P Indices and Fiserv
Data through March 2012




More charts after the jump


Source: S&P Indices

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.

30 Responses to “Case Shiller: Housing Prices Have Not Turned”

  1. Winston Munn says:

    It is always a good time to buy a house – it is the selling that is so trying.

  2. matt wilbert says:

    Actually the data says they hadn’t turned a couple of months ago. Chip Case actually thinks they’ve turned, and I think he’s right. Of course, if the economy gets worse than I expect, they may not have turned for good.

  3. DeDude says:

    My favorite presentation of the Case Shiller data is from calculated risk

    It gives you an idea of how far from the top prices are but also (sort of) an idea of whether the current position is as far down as it ever was. With data from each individual city you also avoid the traps of averaging.

  4. [...] The Case-Shiller numbers show a real mixed geographic bag for home prices.  (Calculated Risk, Money Game, Big Picture) [...]

  5. flocktard says:

    In case people haven’t been noticing, month over month has been gathering strength in several – but not all – areas around the country. Which means once these older numbers fall off the 12 month lookback, the stats are going to skew to show a far stronger momentum. Which will affect the stocks and bonds of those issues affected.

    There is also an interesting dynamic in the worst hit “sand states.” Recent reports about strong sales activity in Phoenix and Vegas suggests that things could be turning there too. If that is the case, look for the PERCENTAGE gains to be strongest in those harder hit areas once the bottom feeding pool begins to shrink.

  6. 873450 says:

    Yes, but …

    The residential market for homes priced between $90 million – $105 million is booming. Careful, disciplined buyers who do their homework and limit their purchases to homes selling in that narrow price range should do well.

  7. DSS10 says:

    And what is the downside if-and-when interest/mortgage rates move back to in the historical 7-8.00% range after the “twist” is over and there is no corresponding growth in wages?

  8. Bob A says:

    as rates start to rise the scramble to ‘get in’ drives prices higher

  9. BennyProfane says:

    “as rates start to rise the scramble to ‘get in’ drives prices higher”

    Yeah, there’s millions of Americans out there with 20-30 % down burning a hole in their pocket, just ignoring these low interest rates and ready to pounce when rates hit 5%. Right.

  10. BennyProfane says:

    Many ignore the obvious here, that, prices “turned” in ’07, and are still improving for 90% of young, middle class Americans who would like to buy a home.

  11. flocktard says:

    @ Benny- there is some logic to what Bob said. When Volcker was strangulating inflation by jacking up rates, mortgages eventually were pricing in the low teens. The upward tangent in rates did what it always does to the retail mind: create a stampede in the belief that rates can only go up from there. Same as they thought with housing prices. When rates are on the decline, no one feels the burn to jump in. They’ve got time.

    The psychology works- when the time comes for rates to pivot, hold your ears.

  12. bear_in_mind says:

    @DeDude: Mr. McBride’s chart is most instructive — thanks for including it!

    @flocktard: I think the indicators you cite would be really notable if this were a “normal” recovery… ya know, without MASSIVE manipulation by The Bernank. But this recovery is anything but normal and you have to factor in how Uncle Sam navigates the so-called “fiscal cliff” on Jan 1, 2013 — along with how The Bernank is going to withdraw QE + ZIRP without a HARD landing. Housing may see seasonal ‘bounces’, but likely the dead-cat variety. Even Professor Shiller opined last month that we may have another 10-15 percent in declines over the next 3-5 years before an enduring “bottom” has been reached.

    @BennyProfane: Good points. Affordability is a huge piece of the puzzle. Add an ocean of indebtedness (both existing homeowners and student loan-burdened young professionals) along with Boomer incomes shrinking (via long-term UE or retirement) and I suspect we have a trough that’s going to persist another 3 to 5 years.

  13. Expat says:

    A period of high affordability is not necessarily a good time to buy a house. If high affordability is strictly caused by price, then, wahoo!, go for it. If it’s because of ZIRP and some sort of fictional, non-existent ability to borrow money from a solvent bank, then fuggedaboudit.

    What will happen to affordability if interest rates double? What will happen when the credit bubble is finally deflated? Sure, Dimon will be able to buy any mansion HE wants, but Joe Six-Pack will be lucky to be able to afford a four-pack of generic beer.

    Housing will head down another 15-20% …oh, except for your house, on your street, in your neighborhood, and your town because you’re, uh, special. And this time it’s different. And you bought at the bottom. And real estate only goes up. And David Lereah is an honest, hard-working human.

  14. Just as the ECRI, Rosenberg & Hussman predictions of recessions & depression in 2011/2012 failed due to chasing anomalies, Shiller & Shilling employ similarly flawed methodology. Nobody would use a Dow10 or Dow20 to gauge the stock market. And Case-Shiller cannot see the national market with its narrow sampling.

    Conversely, the NAR & Census data is much more recent and reveals both New Homes & Existing Homes markets bottomed long ago. New Homes in 2009 … which is why builders’ stocks rocketed.

    Existing Homes sales are 10% above last April. Median prices $16k ahead of where they were a year ago.

    Realty Bubble Monitor chart:

  15. Joe Friday says:


    In case people haven’t been noticing, month over month has been gathering strength in several – but not all – areas around the country. Which means once these older numbers fall off the 12 month lookback, the stats are going to skew to show a far stronger momentum.

    A) Those numbers are already skewed by the moratorium on foreclosures due to the legal action by the state attorneys general. Subsequent to the settlement, there will now be a massive wave after wave of newly foreclosed homes hitting the market.

    B) Not to mention, “month over month” is not a measure of anything.

  16. louis says:

    Did something happen to housing?

  17. flocktard says:

    @ Joe Friday- the foreclosure matter is a good point, as it makes the housing market resemble a suitcase with a false bottom. There’s always more inventory underneath to get rid of. Nevertheless- and I stress this is for PARTS of the country, not the housing market as a whole (which is why I find the emphasis on Case-Schiller a bit noxious) this inventory is being drawn down and the foreclosure moratorium is not a national event. This is a pool that is starting to dry up.

    See also:

  18. Nala says:

    I remain very eager to see market-by-market monthly data on Notices of Default. I’m seriously not buying the Phoenix and Vegas rebound stories.

    I believe the lack of inventory is a contrivance, and that the higher sale prices reflect the better condition (or at least appearance) of flipped houses and of those that are not in the terrible condition that most foreclosures in more established parts of those cities were almost always in over the past couple of years.

    Hard default data, anyone?

  19. BennyProfane says:


    I have heard this argument about rising interest rates so many times, but, it still sounds absurd to me. Doesn’t matter what I think, though, because nobody has any money to fuel this little bubble mania you are describing, and the credit isn’t and won’t be there, either. The only hope for this new bubble is for all of American housing to at least come back to 05 levels, so that whatever liquidity is locked in negative values can be released and the market can start to churn again, slowly, because, as we all know, Americans have no money. They have negative money in the trillions, and nothing for the new world of 20-30% down, (Unless housing gets much cheaper, and, even then…..) and Uncle Ben is broke, so he can’t help anymore. Then there’s the double wammy of 73 million Boomers dying off with no savings and millions of kids with thousands of college debt in a crappy job market. Back in the fabled high interest eighties, even 17% mortgages couldn’t stop the young Boomers from competing for homes everywhere. Don’t expect that now.

    Are you one of these hyperflationistas that think we will be Weimar in a decade? Ain’t gonna happen dude. Think Japan.

  20. Lee Adler says:

    Why does anyone care about the value of a moving average of transaction prices that occurred, on average, five and a half months ago? Do you care about the 60 day moving average of the S&P 500 from mid December, now? Do you pretend that it’s the current value of the stock market? Then stop pretending that Case Shiller represents the value of the US housing market.

    “Analysts” who focus on Case Shiller need to grow up and stop pretending that they know how to analyze real estate trends. There are multiple more timely measures showing recent prices higher than year ago levels, so this bump isn’t just seasonal. Furthermore, there are real time listing price measures right up to the minute, that have consistently been reliable predictors of the lagging historic sales data that show prices up from last year right now, continuing the trend of more recent sales measures.

    Does that mean that prices must go higher? No. But lets start with some facts, instead of ancient historic data that pretends to represent the present. That is pure nonsense.


    BR: Do you think the Housing & Stock market are equivalent? How about even similar?

    (See this on “old” CS data)

  21. cognos says:

    Expat -

    How do “interest rates double” while house prices continue to go down?

    Don’t you see thats somewhere impossible to unlikely? The ONLY way interest rates will “double” is with a super robust recovery in jobs, incomes, etc… that is likely to send house prices back up comfortably? (Plus its basic deflation… with house prices low… ZIRP can exist forever. Inflation cannot exist with decline house prices, as this is THE largest single consumption expense, right?

    Benny -

    Most people are NOT financially LOGICAL… but quite often perfectly ILLOGICAL. They BUY when rates go up. They SAVE in Tbills when rates go to 0%. Look around, its quite obvious no? People want to buy stocks AFTER the market goes WAY UP. No one buys now… when its super cheap.

  22. cognos says:

    I don’t think Case-Shiller is extremely timely or extremely accurate. Its a long-term decent picture.

    I see a lot of quick sales and places going for AT or ABOVE list prices in Manhattan and Brooklyn. In Q1 2009… you couldn’t sell at place for 1/2 these prices… so everyone waited and very few sold. I don’t think he (even tries to) catch that (if would be difficult to impossible to do so).

  23. flocktard says:

    @Benny – first, I don’t think there will be a “bubble mania” but I know how statements like this come about. We stare at the monthly numbers, drawn like moths to a flame to divine a trend. But all I am looking for is a measure of normalization in housing, and I think that the day of people relying on their home equity for things like retirement, or a measure of their assets- which was a phenomenon that really only began in the 80s- will be dead for some time.

    As long as there is family formation, couples will look for homes and good places to raise kids. Renting will remain the poorest option, because it is the domain of the transient, not the people who put down roots in neighborhoods. Housing is still a basic need, like food or clothes, and that is all I would want it to be- no bubbles, just normality.

    Lastly, if you have a twitter account, that housingwire feed is quite valuable- including an article that popped up recently stating that the average FICO score of a closed mortgage had dropped from the previous year. The banks are loosening up again, and even private label securitization will take root.

    Again, once the mere SENSE is there that the corner has been turned, behaviour will change, and you can bet the banks will be back to service it. Mortgage lending is a great business when it’s not abused, and I see no reason why someone with a FICO score of 700 and a strong employment history should not be allowed to purchase a home with 10% down.

  24. Joe Friday says:

    Why does the NAR continue to allow this clown to embarrass them ? During his appearance on the Nightly Business Report:

    We are going into this nice virtuous cycle where the economy is helping housing and housing is helping the economy.

    Lawrence Yun – Chief Economist, National Association of Realtors


    Ah, Earth to Larry. I think you’re standing on your oxygen hose.

  25. ElSid says:

    Uh, does Hutter know how the C/S data works? What does he think it is, ten or twenty houses? I guess his reference to NAR data should answer any questions on that.

  26. Expat says:

    @Cognos: House prices are not counted in inflation. ZIRP is an aberration. We do not need sustained recovery or high inflation to return to 3-4% Fed rate. If we can reduce real unemployment to 5 or 6 % while decreasing debt, we could possibly maintain low interest rates. But we have 8% official unemployment, millions of drop-outs from unemployment, and massive under-employment.

    If interest rates were are realistic levels like 4 to 6%, I would agree that doubling would be unlikely unless there were a very robust recovery or very high inflation (again, house prices are independent of today’s inflation measurements except for OER. We saw that during the bubble, OER was a poor measure of housing inflation). But we are operating at 0.25%. Just adding 25 basis points is a doubling of that rate! What is so hard to conceive about a 3% Fed funds rate? That would probably take the 30 year mortgage rates up to 7 to 8% for the very best borrowers.

    Financing a 150k mortgage at 4% costs a mere $716 a month. At 8% this jumps to $1100. How many households can handle that extra $400 a month? That represents a 12.5% increase in wages just to break even on that.

    Houses look affordable only based on very recent data. Historically they are not.

  27. BennyProfane says:


    ” I see no reason why someone with a FICO score of 700 and a strong employment history should not be allowed to purchase a home with 10% down.”

    Now, how many young people (the demographic the market needs – the rest of us are already in it) are out there with such qualifications? Strong employment? Really? 700? And, I gather that you are young yourself, if you advocate 10% down payments. it wasn’t that long ago – oh, the early ninties, I would say, that 20 down was an average minimum. The “new normal” isn’t that draconian at all.

    Oh, and, about this:

    “an article that popped up recently stating that the average FICO score of a closed mortgage had dropped from the previous year. The banks are loosening up again, and even private label securitization will take root.”

    It ain’t the banks loosening up, dude. It’s an election year. The FHA, or, should I say, you, the taxpayer, that is, ahem, loosening up again. The banks aren’t that stupid to get caught in that game again for a while. They know we have another 20% down. And, as far as the private label securitization, well, the Germans have much more serious problems, and won’t be buying our triple AAA crap anymore.

  28. flocktard says:

    @Benny- speaking as a former mortgage broker who had a correspondent relationship with over 30 lenders- many of whom were swallowed up or blown up, I can tell you you’re wrong on several points. I still follow this space closely, so don’t wander into the intellectual equivalent of ” It was the CRA!! It was the CRA!!”

    For one, we’ve had low down payments since 1956- that was the year the Mortgage Guarantee Insurance Company, called “Magic” in the trade was founded. Low down payments with mortgage insurance, which required another round of underwriting, were not uncommon, and they surely did not begin in the 90s. What smart homeowners did was get the house reappraised three years later, and were generally successful in getting the M.I. dropped as home prices appreciated and the homeowner kicked in a few bucks.

    Secondly, your FHA cyncism is uncalled for. The borrower pays the Up Front Mortgage Insurance Premium, PLUS a monthly MI fee so the taxpayer is off the hook in the event of a default. No one is pulling the strings, and FHA has long been an option for those denied a conventional mortgage.

    Lastly, the banks ARE getting more comfortable- but not enough, in my opinion- on underwriting. Lastly, a firm called Redwood Trust, which I have had my eye on, has been building a book on Jumbo mortgage securitization.

    I can assure you the securitization process has changed slightly since 2005.

  29. ElSid, the NAR annual data suggested in Aug/2008 the Existing Home price of $215k would bottom @ $172k in 2011 and there would be new highs in 2021: The actual low was $166k in 2011.

    Please tell us what C-S predicted. A while ago Shiller said another 20% to go. And last month he predicted no new highs for five decades…

  30. [...] another key tidbit from the Case Shiller report itself, courtesy of The Big Picture. With these latest data, all three composites still posted their lowest levels since the housing [...]