Is the Fed trying to take some air out of the Housing market?Double digit gains over the past year might have their attention:

• Average home prices increased 11.6% and 12.1% for the 10- and 20-City Composites in the 12 months ending in April 2013.
• From March to April, the 10- and 20-City Composites rose 2.6% and 2.5% respectively
• The 10- and 20-City Composites posted their highest monthly gains in the history of S&P/Case-Shiller Home Price Indices
• All 20 cities and both Composites showed positive year-over-year returns for at least the fourth consecutive month.
• On a monthly basis, all cities with the exception of Detroit posted positive change.
• As of April 2013, average home prices across the United States are back to their early 2004 levels for both the 10-City and 20-City Composites.
• Measured from their June/July 2006 peaks, the peak-to-current decline for both Composites is approximately 26-27%.
• The recovery from the March 2012 lows is 13.1% and 13.6%, respectively.

Charts below:

 

The latest results of the Case-Shiller Home Price data through April 2013:

Click to enlarge
Chart

Chart

 

 

 

 

 

 

Source:
S&P Dow Jones Indices, June 25, 2013
www.spdji.com

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.

15 Responses to “Double Digit Gains for Case/Shiller Home Price Index”

  1. Lee Adler says:

    Case Shiller Index is like reporting the SPX 3 month moving average from mid January. Nobody would do that, but still, we give Case Shiller credence as if it represents the current market. Case Against Shiller http://wp.me/p2r1d8-A7Z

    • DHM says:

      There are sound reasons why Karl Case and Bob Shiller chose to base the index on a trailing 3-month average. Why do you have a problem with that?

      • Lee Adler says:

        Excuses, excuses.

        I like real time indicators that tell me where the market is now, not 5 1/2 months ago. Shiller missed the bottom in November 2011 because of the stupidity of the methodology of this indicator. He was a year late in recognizing that prices had turned up.

        Technical analysts do not look at 3 month moving averages in a vacuum. They want to know what the price is today and how that relates to the trend. Looking at a stale, idealized smoothed curved from 5 1/2 months ago tells us nothing about the current market. Absolutely nothing.

        Which is essentially what I wrote in the first place. http://wp.me/p2r1d8-A7Z

        Meanwhile, inflation is not the same thing as recovery. The media and pundits in general are confusing the two. http://pic.twitter.com/R8mkHGNYgZ

      • Frwip says:

        Why do you care about real time data on something like real estate.

        You have ways to trade and flip houses from a screen on a sub-second basis ? Or even on a weekly basis ?

        Why you would care to have missed S&P 500 at 685 as long you got on the ride when it hit 950, 4 months later ?

        Funny that obsession with real time indicators, with instant data. It’s utterly irrelevant, except for HFT. For anybody else, it’s entertainment.

        What saved my ass in late 2007 / early 2008 had nothing to do with split-second information down the wire but everything to do with stupid, useless, stale, three month lagged Case/Schiller index, which was screaming that the party was over, a year before Wall Street woke up to reality.

      • capitalistic says:

        How can RE be analyzed in real time? If you want time sensitive asset pricing, stick to stocks or options or loans. Real estate is rate sensitive.

      • Lee Adler says:

        Sure it can. Any experienced appraiser working in the market does it every day. I did it for 23 years in the business and continue to do it as an outside analyst. There are some excellent commercial real estate analysts who are quite capable of recognizing market conditions. In fact, it’s required of them. Not all do it honestly, but many do, and are quite capable. If you have ever actually been in the business as I was, both as a real estate broker, mortgage officer, and commercial appraiser, you can do it.

        I’ve done it successfully for many years. I sold my house in Florida and called the top in 2005. That was the volume peak. The price peak came a year later in many markets but hardly anyone could actually sell by then. I was writing at the time and correctly forecast the approximate timing of the decline. I tracked the decline and recognized the price lows in early 2012.

        The point about being 3 months late would be ok if it was 3 months, but it’s not. Case Shiller is 5 1/2 months late. If you’re a housing speculator, rehabber or investor, that’s valuable time. But if you’re a professional, you’re already in the market and you already know where the market is. Realtors have real time market data. They don’t release it to the public, but listing price trends are accurate reflectors of the market. They are above the absolute price level, but the ask is as good a market indicator as the bid. Sellers in the aggregate are not all greedy idiots. Serious sellers get market feedback and price to sell.

        If you’re buying a home that you expect to live in for the next 15 years because it’s the house of your dreams, then sure, timing is completely irrelevant. But if you’re in it to make money, then timing matters. It matters a lot. Being 5 1/2 months behind the curve will cost you.

  2. Bam_Man says:

    Amazing what 3.75% 30-year mortgages will do to home prices. Now that mortgages are back above 5.00%, let’s see how “durable” those home price increases were. The word “transitory” comes to mind.

    • BennyProfane says:

      There’s a lot of poor people who are now underwater on their mortgages and don’t know it. The consumers who bought in the last year or so, following the advice that homes have never been so “affordable”, and that was a chance in a lifetime to lock into a low down payment sub 4% loan. Fine, if they’re going to stay there for twenty years. Woe to them if they have to move to another state for a job.

  3. DHM says:

    I have to say that these boards are increasing populated with,natttering nabobs of negativity ( to quote our former VP,) I suspect many are simply pissed at having missed an opportunity,

    Yes, the rate of increases in housing values will slow. Yes, the number of homeowners underwater will only slowly continue to decrease. Yes, the number of foreclosures is still historically high.

    But face it. The housing recovery is real and sustainable. There is not going to be a new wave of foreclosures. Only individuals who have been credit worthy (or cash flush) having been purchasing homes the last few years. They are not walking away.

  4. dc20008 says:

    @DHM I agree completely. No we are not going back to the housing bubble era with crazy high home values, but why would we? Like stocks, I am in it for the long haul.

  5. Joe Friday says:

    DHM,

    There is not going to be a new wave of foreclosures.

    Already happening:

    ~~
    Home repossessions in the U.S. jumped 11 percent in May after declining for the previous five months as rising prices and limited inventory for sale across the country spurred banks to complete foreclosures.

    Thirty-three states had increases in the number of homes repossessed, RealtyTrac said in a report today.

    The biggest annual jumps in states with more than 1,000 home repossessions occurred in North Carolina, up 60 percent from the previous month, followed by gains of 44 percent in both Wisconsin and Illinois, 23 percent in Colorado and 19 percent in Michigan, according to RealtyTrac.

    The current pace of home seizures would result in more than a half million repossessions by the end of the year, compared with 671,251 in 2012, RealtyTrac said.

    BLOOMBERG
    ~~

    • DHM says:

      Joe F.,

      I appreciate your response.

      However, the description you provide fits the foreclosures leftover from the 2006-2009 downdraft in housing. And it reflects the final push by the note holders to take advantage of price increases due to the low inventory.

      My point is that recent purchases (those after 2009) are not primed for foreclosure.

      • Joe Friday says:

        DHM,

        However, the description you provide fits the foreclosures leftover from the 2006-2009 downdraft in housing. And it reflects the final push by the note holders to take advantage of price increases due to the low inventory.

        Actually, as has been previously pointed out here by BR and others, the new wave of foreclosures is merely as a result of the resumption of seizures after the settlements that the banks made with the states and regulators after a lengthy period of dramatic inaction.

        My point is that recent purchases (those after 2009) are not primed for foreclosure.

        A point which has nothing to do with the new wave of foreclosures. Not to mention, I doubt the housing market will care when the rising foreclosures entering the market were purchased.

  6. WKWV says:

    If Private Equity was buying a substantial quantity of residential housing in all cash transactions, how is that going to be effected by rising consumer mortgage rates?