Check out the nice price rise in Q1 2012 versus Q1 2011 for Case Shiller.

As I have been saying for some time, this is an apple to orange comparison — pitting a period of high foreclosures versus a period of voluntary foreclosure abatement by the money center banks.

Distressed sales are 20% < less than non -distressed sales. The NAR has reported that the number of distressed sales has fallen from 38% to 26% of the total basket.

Do the math, and this accounts for nearly all of the price improvement.

 

Click to enlarge:

 

 

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Source:
S&P Dow Jones Indices
Press Release
Home Prices Rose in the Second Quarter of 2012
According to the S&P/Case-Shiller Home Price 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.

19 Responses to “Case Shiller Q1 2012 Rises”

  1. sailorman says:

    There is a significant increase in buyers in the distressed areas of Florida. This is more than a decrease in foreclosures. Florida benefits from the demographics of an aging nation, so I doubt this is nation wide.

  2. rj chicago says:

    One name everyone keeping track of housing needs to retain – Mark Hanson.

    @ Sailorman – I agree with your very brief assessment that demographics is key. And as Hanson points out there are so….many underwater folk out there (potential repeat buyers) with impaired credit these minor wafts of news mean NOTHING in the big picture. This is gonna take a long time to heal folks.

    ~~~
    BR: As you wish: http://www.ritholtz.com/blog/2012/08/hanson-on-case-shiller/

  3. kek says:

    so are you telling us that buying a home at 50% of replacement cost at 3.25% is a bad deal? Or that investing in building material stocks that have appreciated 200% since 10/11 is a bad deal?

    ~~~
    BR: If you are a buyer who has the downpayment, wants to own, be in that school district,and doesnt plan to move the next 7 years, then sure, step up & buy. Just recognize the possibility that you may be upside down 10% or even 20% at some point in th future.

  4. Joe Friday says:

    Do the math, and this accounts for nearly all of the price improvement.

    BLASPHEME !

    (Your making Larry Yun cry !)

  5. wally says:

    “so are you telling us that buying a home at 50% of replacement cost at 3.25% is a bad deal?”

    Amazing, isn’t it. Everybody knows you should buy low, but when things get low everybody gets nervous.

  6. Iamthe50percent says:

    kek and wally, how do get a buyer for your old house? And how cheap will you have to sell it to get it sold? That’s the rub. If you are young and rich with a job and an apartment, it’s a great time to buy.

  7. VennData says:

    “…Do the math, and this accounts for nearly all of the price improvement…” I can do math, but I am unable to “…Do the math…” in this case.

    For example, the FB lockup period was well known in the market, as are all IPO’s, what is “the math” that shows how much this affects price. Without “… the math…” I could as easily say the RE market should be that much higher with that known overhang.

    BR, you’re a shining star in a dark-matter media universe, but “do the math?” Price is not always truth, but when someone thinks otherwise, it is incumbent upon the challenger to show this. “…do the math…” is not a way to arrive at price. The best one can do is point out an unknown in the market; this foreclosure time-release is well-known. The quality, ROIs and location of these foreclosures is well known in each individual market. People look this stuff over every day, people who can do math.

    ~~~

    BR: If distressed sales are 20-30% lower than comparable home sales, and they drop from 38% to 28% of sales, then about 10% of total sales that under normal circumstances would be distressed are missing from the sales data.

    Rough it out: Missing 10% of sales @ 25% lower prices = 2.5% price increase

  8. kek says:

    “Just recognize the possibility that you may be upside down 10% or even 20% at some point in th future.”
    Amen to that on every investment decision I make. I have the bruises to show for it.

  9. BuildingCom says:

    kek Says:
    August 28th, 2012 at 11:33 am
    so are you telling us that buying a home at 50% of replacement cost at 3.25% is a bad deal?
    ———————————————————————————————————————————–

    How do you even know what “replacement cost” is?

  10. kek says:

    replacement cost is how much cash would it take to duplicate the property for sale. If you understand development and construction costs, you can compute a replacement cost fairly easy. Your margin of safety lies in the discount.

  11. BuildingCom says:

    Well…. sort of.

    Secondly,

    “Replacement cost” is new construction. An existing structure is discounted from new construction costs, thus you’re making a apples to oranges comparison.

    Thirdly, there isn’t any resale housing priced “50% of replacement cost” that I’m aware of. Resale housing asking prices are set at levels far above M+L+profit costs.

  12. kek says:

    Phoenix Metro area has 50% replacement cost housing. Call up a bank REO dept. and get a list. A 55 year old house next to mine in a very good established neighborhood was short saled at $110 per foot. The raw lot with all of it’s improvements is worth in today’s market $55 per foot. The quality of construction (block & redwood), windows, kitchen, etc., is worth $170 per foot in todays construction environment. Good school district., etc.

    $225 per square foot sum of the parts replacement value, short sold for $110.

    Replacement cost is not just new construction. If you are buying a seasoned home in an established neighborhood, many upgrade cycles are likely incorporated into the house. Could be a new kitchen, pool, landscaping etc., that you will make a replacement cost assumption.

  13. BuildingCom says:

    “Kek”,

    Clearly your’e not in the construction and contracting business as your inflated numbers prove it.

    We and our competitors build and earn profit at $60/sq ft.

  14. kek says:

    I guess that my anology to your comments is that a BMW & Ford are both cars, but not the same.

    BuildingCom, I am thrilled that $60 per ft. with a good profit is your market. You must build where the land is flat or location is not at a premium, with a lot of drywall. In the NY Metro area, you couldn’t even build an unheated garage for $60 per foot.

    I actually invest in raw land parcels, and split for pre development. I just completed a custom home last year as an owner/builder that I wish came in at $170 per foot.

  15. BuildingCom says:

    We BUILD in NY. IN westchester county.

    And considering there is a globe full of land and 95% of it goes undeveloped, there is plenty of land.

    You didn’t “complete” anything. You paid a retail price to contractors like me except in your case, you got ripped by the contractor.

  16. kek says:

    We and our competitors build and earn profit at $60/sq ft.

    sure

  17. BuildingCom says:

    You got caught misrepresenting yourself as someone who earns a living in the construction management biz.

    You’re not the first one to lie about housing costs and certainly won’t be the last.

  18. kek says:

    $60 per ft., OK.

  19. BuildingCom says:

    And profitable.