Given the fundamentals, there's not much reason to suggest the long-term trend-line will even be positive sloping once the short-term excesses are wrung out (i.e., everything's below 100).
Given all the attention consumer confidence was given as a proximate factor in the Great Depression I'm surprised today's data point isn't getting more love:
wtf happened at 10:40 this morning to cause the markets and financials to head upwards? PPT?
Sigh... Markets can't possibly break their Jan/Mar lows without building cause, that means generating lots and lots of volume. Both up and down price movements are necessary to generate the kind of volume needed. Prices will be pushing lower on strong volume for the next several days, maybe a few weeks until they can bust down.
[The June consumer confidence index fell to 50.4 -- the lowest level since 1992 -- from a May reading of 58.1, revised up from a prior estimate of 57.2. Economists surveyed by MarketWatch had expected a June reading of 56.0.
"This is incredibly awful," wrote Ian Shepherdson, chief U.S. economist at High Frequency Economics. "Even as some people spend their tax rebates ... the majority appear to be overwhelmed by the surge in gasoline and food prices, and the drop in stock and home prices." ]
New York's Republican Senate Majority Leader Joseph Bruno said on Wednesday his surprising decision not to seek re-election had nothing to do with a federal probe of his business ties.
"wtf happened at 10:40 this morning to cause the markets and financials to head upwards? PPT?"
The wonderful news about soaring, happy consumer sentiment and rapidly increasing housing prices. It wouldn't surprise me at all to see the Dow flirting with 12K by the end of the day.
I know that... just the abrupt reversal of financials seemed weird, like there was some news that hit the wire. SRS and SKF went from 3% up to negative in just a few minutes.
As we discussed yesterday, Denver is at a 4.5 price to income ratio still. Historical ratio is around 3.0. People buying today have no idea of how clueless they are. But, when they are broke and standing in the food line at the homeless shelter, they will realize how clueless they were. And how hungry they are.
Below I have posted the real price change (adjusted by the CPI-U) from each metro's peak for each of the 20 areas in the Case-Shiller index. I don't think any of us who are regular readers of Calculated Risk are particularly surprised by the results.
I then decided to look at the real price change since January 2001 based on CR's median income/median house price graph, because that was generally before the current bubble. To me, these numbers brought some surprises, like Denver, Dallas & Atlanta being in negative territory. LA & Miami having the greatest run up did not surprise me, but DC being 3rd, as well with NY, Seattle and Portland being 4th, 5th & 6th did. I guess I hadn't thought that creative mortgage lending played as large as a role in those metros. Although Seattle and Portland have fallen less than 10% in real terms, they are both still 37% above 1/2001 prices.
So I went back to January 1998 to compare real prices, and saw that only Detroit & Cleveland are in negative territory, which came as no surprise. But the extent of the difference between 1998 and 2001 in SF, Boston & Denver surprised me. Their bubbles obviously started earlier and were much more tied to the Internet bubble.
The 1998 data shows that LA, NY, SD, DC, Miami, SF and Seattle as well as the Composite 10 are still well above, gt 60%, the real home prices from January 1998. It's hard to imagine that real household income has risen that quickly in all of those areas. Don't know if this has any bearing on future home prices, but it gives pause to ponder some interesting data.
Sorry about the formatting, but I thought I would share it.
Home Values adjusted for Inflation - based on CPI-U\t\t\t
MSA\t\tPeak Mth\t\tChg from Peak\t\tChg-1/1/2001\t\tChg-1/1/1998
Las Vegas\t\tFebruary 2006\t\t-33.85%\t\t28.49%\t\t34.27%
San Diego\t\tNovember 2005\t\t-33.65%\t\t25.22%\t\t73.63%
Phoenix\t\tDecember 2005\t\t-33.05%\t\t24.14%\t\t40.07%
Miami\t\tDecember 2006\t\t-32.97%\t\t48.13%\t\t66.04%
Detroit\t\tDecember 2003\t\t-32.85%\t\t-28.67%\t\t-16.98%
Los Angeles\t\tOctober 2006\t\t-30.48%\t\t48.87%\t\t89.77%
San Francisco\t\tDecember 2005\t\t-29.89%\t\t2.31%\t\t62.54%
Tampa\t\tMay 2006\t\t-29.28%\t\t31.29%\t\t48.08%
Washington\t\tDecember 2005\t\t-25.48%\t\t45.48%\t\t69.12%
Minneapolis\t\tDecember 2005\t\t-25.14%\t\t0.28%\t\t26.64%
Composite\t\tDecember 2005\t\t-24.39%\t\t30.29%\t\t66.60%
Composite-20\t\tDecember 2005\t\t-22.96%\t\t23.18%\t\t
Boston\t\tJune 2005\t\t-20.77%\t\t9.92%\t\t50.64%
Cleveland\t\tSeptember 2004\t\t-19.13%\t\t-14.09%\t\t-9.22%
New York\t\tDecember 2005\t\t-16.47%\t\t40.31%\t\t75.00%
Chicago\t\tOctober 2006\t\t-16.18%\t\t13.17%\t\t26.18%
Denver\t\tAugust 2005\t\t-14.37%\t\t-8.73%\t\t20.56%
Atlanta\t\tOctober 2006\t\t-13.41%\t\t-5.07%\t\t6.89%
Dallas \t\tJune 2002\t\t-11.52%\t\t-7.84%\t\t
Seattle \t\tAugust 2007\t\t-9.55%\t\t37.17%\t\t61.79%
Portland\t\tNovember 2006\t\t-9.55%\t\t37.16%\t\t40.54%
Charlotte\t\tAugust 2007\t\t-6.11%\t\t4.46%\t\t7.63%
And a good analogy of Vancouver would be San Diego.
Vancouver is now showing a market turn with a doubling of inventory since January. Highest inventory gains and reported asking price drops are in the upscale suburb of West Vancouver (not to be confused with the west side of the city of Vancouver). Think La Jolla.
But denial is extra strength in British Columbia - this is where the license plates say "The Best Place on Earth". BC's biggest industry - forestry - has been clobbered, tourism is on the ropes, and the economy is being kept going by, you guessed it, construction.
If we take Case/Shiller and OFHEO data at face value (I know, I know...) then what we see is that the big metropolitan areas - subprime and Alt-A included - have a faster pace of price decline, but apparently decelerating, while prime-mortgage home prices are falling more slowly, but the fall is accelerating. That's pretty much in line with prime being a year behind subprime in the downturn. If this works out (remember, this is a face-value look), then we can expect GSE-qualified mortgages to get beaten up worse in coming months, a process that is already underway.
Was wondering when you'd show up. Doesn't look like it today and tomorrow it'll be way up above 12000.
Could be; this being the third time in the latest market swoon that we've visited the 11700 zone, maybe it's time the market genuflect's for a period on this closing number that i've randomly picked. Today, gosh darnit!
Vancouver? I was there on Saturday. All condo living. Nothing wrong with that as long as the economy is strong but just as volitile on the way down and no strong dollar to buffer the decline this time. Both Vancouver and Seattle are incredible economic engines. Think SoCal circa 1970 but with a work ethic and enough bad weather to keep people in their offices all day. I wish I were in the crane rental business there (here actually for a few more days).
Interesting times said "Toronto resale supply is up over 200% this year based on my fixed search in MLS.ca"
Well, that's quite a contrast with the Toronto Real Estate Board 'Market Watch' giving May 2008 data (Google TREB)
"Prices trended upward on a year-over-year basis, with the overall average going to $398,148, up four percent over the May 2007 figure of $382,787. ..Furthermore, inventory has increased 15 per cent to 27,267 listings over May of 2007'
Mind you, perhaps Canada Immigration slipped up and gave Lawrence Yun a work visa.
Vancouver is full of condos now and people now commute to the suburbs to work. A full reversal from 10 years ago where people commuted to the city. Ah yes those Vancoverites are stuborn and will never be convinced their home prices could fall until they do.
(In Sept 1928), Andrew Mellon said "There is no cause for worry. The high tide of prosperity will continue."
"Mr. Mellon did not know. Neither did any of the other public figures who then, as since, made similar statements. These are not forecasts; it is not to be supposed that the men who make them are privileged to look farther into the future than the rest. Mr. Mellon was participating in a ritual which, in our society, is thought to be of great value for influencing the course of the business cycle. By affirming solemnly that prosperity will continue, it is believed, one can help insure that prosperity will in fact continue. Especially among businessmen the faith in the efficiency of such incantation is very great."
What makes you say that, BB? Tomorrow's a big day for announcements.
FOMC Meeting Announcement, when one thinks about it, whatever they did in the past they do it to protect the markets.
I am gambling that they are not that impotent that there would be an adverse reaction to whatever they plan to do, at least not yet.
In Denver 35 years. The stats somehow miss the runup. Douglas county was among the fastest growing counties for 15 + years. I wouldn't live there unless I worked from home. They have a water problem, a commute problem, and build schools as though the growth is innevitable. Close in neighborhoods have been drastically changed by pop the tops. The idea that we didn't participate in the bubble is simply not accurate. This used to be a place with a handful of $1m homes, check recolorado.com, there are 1000+ $1m+ homes on the MLS lots have been there for 12 months plus. The stats here lie. We had normal priced housing, but always were top 20 in funny loan stats. My guess is we're behind the curve. I do wish the stats were right, it just doesn't ring true.
Yes, psychology uber alles. All it takes is for everyone to believe we're in an "economic downturn" (and act accordingly) to make it happen. Of course when people hear "fire" they're more likely to panic if they can smell something burning, even if they can't see any flames yet.
Schillers index exempts new homes, counts only 20 metro areas and counts only resales. Yet, its somehow a gauge of the countrys housing market and he preaches in every outlet that is willing to listen (while selling his books and services).
His method leads to overstating rise in an up market and overstating declines in a down market (especially in the areas of high foreclosures.)
Another one is "affordability index". With percentage of homes inventory available for sale annually being in single digits of overall housing stock, what difference does it make what total % of "median income earners" can be in a market for a home? Especially when considering the fact that income distribution in the country is so skewed towards the top 40% of the earners, the bottom 10% make practically nothing, under $10,000 (with close to 50% unemployment rate?) and 21% of all households make under $20,000? Should we include children 1-7 years old in calculation of % of smoking population too? Do they smoke? Perhaps this is why adult population term exists?
The much more accurate picture of home-buying power and subsequent indexing would be obtained by removing two bottom deciles and taking median of the remaining earning population pie.
When you have Harvard professors putting data that has a self-serving odor to it and the entire financial community eats it as a serum of truth one can be little surprised when rating agencies give out AAA ratings to paper that can be given single A at best even under relatively healthy economic conditions because some bright fellow with a fancy degree applies 5% perpetual appreciation to underlying collateral while making $200,000 doing so. Or that countrys largest banks have 30%+ of their loan portfolio in one market (California) while employing folks with title of Chief Risk Officer?
CR
While I hope that the New York market will crack (need to find a coop for my daughter,I think that it will, as usual be different from (the rest of) the US.
One major reason is the influx of foreigners taking advantage of the weak dollar. Second will be its mass transit infer structure.
Vancouver also seems to be a special class because of the continued influx of Chinese-especially the newly rich mainland Chinese
Schillers index exempts new homes, counts only 20 metro areas and counts only resales. Yet, its somehow a gauge of the countrys housing market and he preaches in every outlet that is willing to listen (while selling his books and services).
His method leads to overstating rise in an up market and overstating declines in a down market (especially in the areas of high foreclosures.)
At least in the areas I pay attention to it seems to correspond pretty closely with the decline in list prices. Whereas the sales prices reported by the NAR seem to be much more optimistic.
I've always wondered why people would be lowering their asking prices if sales prices were holding up.
the case-shiller index seems to corroborate the MLS data in suggesting this isn't happening.
Where I am there's almost a 10% difference in the YoY change in list prices and sales prices (reported by the NAR).
I'm thinking we see 2001 price levels maybe 2000 prices again. Untill Banks start foreclosing we are no where close to bottom ( I told Suntrust I want to buy 50 to 100 houses two weeks ago still no phone call ) . 2010 maybe depend on how the fed handles the organized takedown that's going on . Wait till OIL hit's 175 (The week Iran gets bombed ) My guess is mid JULY . Then when oil crashes all market will follow . See you bitches @ the bottom
Datahead @ 11:45, thanks for this. I'm in Seattle and committed to renting until price drops have leveled off (which lately I'm thinking will take longer than I'd originally suspected) -- and to encouraging my friends to do the same; I'll be adding your post to my arsenal in that regard.
My family mostly lives in the lower mainland not that far from Vancouver, and I have a brother and a BIL who work in the construction industry there. The whole place is completely nuts (affordability is practically non-existent) and they and others are nervously wondering when the housing price boulder is going to start rolling back down the hill. Some small almost imperceptible signs: houses on the market a bit longer than usual, some small decreases in asking prices, and a few extra builder incentives.
When you have Harvard professors putting data that has a self-serving odor to it and the entire financial community eats it as a serum of truth one can be...
Anonymous
Puuuleez. You forgot to provide the NAR shill attribution you are quoting.
Why do most of the anecdotes on this site and graphs ignore NYC when talking about a potential bubble? As far as I can tell (comparing OFHEO prices to BLS rents), NYC has at least as much appreciation as LA and Miami and has seen far less of a correction in the past 24 months.
Both Vancouver and Seattle are incredible economic engines
Please. Vancouver has not one Canadian-class employer, let alone world class. No banks. No manufacturers. No oil companies. No major high tech. No national airlines. It has a median household income about the same as Montreal. So why is it about 70% more expensive than Toronto or Seattle?
What drives Vancouver? Drum roll.. Real Estate! Well that's really sustainable isn't it? -8% savings rate too.
Case-Shiller probably overstates prices changes - somewhat. But there are boom markets not in it and bust markets in (Detroit?). In any case the Case-Shiller markets cover 1/3 of the population and more than half the property value, so it's highly relevant from a macroeconomic perspective. CA/FL/AZ/NV are enough to crash the financial system on their own if the losses hit fast enough.
We're in Denver, in a popular neighborhood (close to downtown and light rail, good schools through middle school, generally walkable, etc.). Our experience is that prices are definitely up a little since early 2007. If you look at the numbers, foreclosures are down in the city, and inventory has been steadily decreasing (seasonally-adjusted) for a few years.
It's just a guess, but I think that the city itself (as well as the more popular inner suburbs) has come through the worst of it. I doubt appreciation will keep up with inflation for the next few years, and the overbuilt burbs are still pretty screwed, but places like Bonnie Brae, Wash Park, Highlands, Capitol Hill, etc., are probably done dropping.
Case-Shiller tracks the purchase price of the same home over time and that has been attributed as one its best strengths. However, low interest rates and "creative financing" have led to larger square footage for newer houses. Wouldn't it be more informative to track the purchase price in real dollars per square foot?
This data is Tooooooooooooooootaaaaaaaallll Buuuuuullllshhittttt. SF is not down 23%. I live there and this data is wrong, just plain wrong. If that data point is wrong, how can you rely on anything else?
It's really amazing to me that an index as flawed as Case-Schiller gets as much attention as it does. Take 2 tracts of 100 houses in the same metro area. A is an older stable neighbourhood where the average house turns over once every 15 years (7 houses sell/year). So in a 2 year period, maybe 1 house will sell twice. B is an exurban area where the average house turns over every 5 years (20 sell/year). Here one can easily get 5 houses selling twice in 2 years.
So B, a neighbourhood where there is likely to be a lot of speculation is 5x over-represented. Thus the index will exaggerate on both the upside and the downside. Am I denying that prices went up a lot in 2001-2006 and are now going down? No. But C-S is over-estimating the extent.
(Bruno) said his decision not to seek re-election after 32 years in office was a personal decision that partly stemmed from his desire to spend more time with his family.
lets not forget that one (of manymanymany) properties in DC i bought rehabbed and sold impact the case shiller index. and especially combined with the re-urbanization of the cities, you got garbage data.
In NW DC:
Sold 1999 - 69k
Sold 2003 - 145k (to me)
Sold 2005 - 625k
gee what happened between 03 and 05? well i spent 200k to completely gut (and i mean gut, from the basement floor you could see the sky)(and then we lowered the basement) and the occupy. we sold it in '05, got our cap gains free gain and moved on.
so this property shows what, nearly a 10 fold increase in 6 years?
doesnt take into account the fact that in '99 the 'hood was bombed out. nor that in '03 i spent 200k on it. nor in '05 the largest retail center in DC opened three blocks away from it.
How would Case-Shiller show big nonexistent price declines? A glut of nuclear reactors built in tony residential areas causing Shillered sales to be disproportionately those of blighted houses? No. Anyone come up with a plausible story?
It's still not over.. maybe another 15%.
I wonder how much below the trend-line they will dip before the start rising again....
wtf happened at 10:40 this morning to cause the markets and financials to head upwards? PPT?
Price increases in Denver and Clevland? We are bottoming! Here come the write ups! King dollar will strengthen and oil will fall back to 68 dollars!
CR do you know if denver and clevland saw a larger decrease in sales? Higher prices mom may be due to lower REO sales
8 of the 12 cities in the composite 20
Unclear on the concept...
Price increases in Denver and Clevland? We are bottoming!
I hope you got in while you had the chance.
It's still not over.. maybe another 15%.
BB | 06.24.08 - 11:06 am | #
Ah... an optimist.
Given the fundamentals, there's not much reason to suggest the long-term trend-line will even be positive sloping once the short-term excesses are wrung out (i.e., everything's below 100).
sarcasm Ac just sarcasm
Suckering in the technical buyers at the march "lows"....also some well placed SPX buys at above ASK sort of helps that as well.
March "lows" and the start of a two-day Fed meeting....not coincidental at all.
I am giddy at the prospect of what "happy news" will come out today.
Ciao
MS
Case Schiller doesn't do international. Maybe Toronto is useful as 'Minneapolis if mortage lending had continued with 2002 standards'. See 1974-2008 graph at
http://fisher.utstat.toronto.edu/sharp/Files/Press%20articles%20and%20other%20stuff%202008/Toronto%20housing/Toronto%20average%20prices%201974-2008%20v01.pdf
greenspan yappin about the obvious
wtf happened at 10:40 this morning to cause the markets and financials to head upwards? PPT?
Hmmm... I'm guessing the Yen might have sold off at this time. Just a hunch...
Patrick | 06.24.08 - 11:24 am | #
Toronto resale supply is up over 200% this year based on my fixed search in MLS.ca.
Turnover is down, prices are down about 10-20% already.
It is just starting to crash. We'll know more this winter and next spring.
A good analogy of Toronto would be Chicago.
"Economy on brink of recession, Greenspan says"
He also said we are on the brink of war with Iraq and the strong dollar may be weakening.
Expired
I have bookmarked Zillow for a family member's Las Vegas house address. Checking every other day I almost always see a $500-$1000 drop.
Can you imagine what it would be if we had real price discovery?
Given all the attention consumer confidence was given as a proximate factor in the Great Depression I'm surprised today's data point isn't getting more love:
Worries about the economy and jobs drove consumer expectations to a record low in June
Speed writes:
"Economy on brink of recession, Greenspan says"
He also said we are on the brink of war with Iraq
What did they do again?
Greenspan can't tell you what will happen but he sure can tell you what has happened.
wtf happened at 10:40 this morning to cause the markets and financials to head upwards? PPT?
Sigh... Markets can't possibly break their Jan/Mar lows without building cause, that means generating lots and lots of volume. Both up and down price movements are necessary to generate the kind of volume needed. Prices will be pushing lower on strong volume for the next several days, maybe a few weeks until they can bust down.
Interesting Times writes:
Ah... an optimist.
We got to stick together us optimists. There's too many economists out there
ac,
Your link didn't work.
Yes, psychology uber alles. All it takes is for everyone to believe we're in an "economic downturn" (and act accordingly) to make it happen.
We got to stick together us optimists. There's too many economists out there
But, the economists ARE the optimists.
[The June consumer confidence index fell to 50.4 -- the lowest level since 1992 -- from a May reading of 58.1, revised up from a prior estimate of 57.2. Economists surveyed by MarketWatch had expected a June reading of 56.0.
"This is incredibly awful," wrote Ian Shepherdson, chief U.S. economist at High Frequency Economics. "Even as some people spend their tax rebates ... the majority appear to be overwhelmed by the surge in gasoline and food prices, and the drop in stock and home prices." ]
Good times!
barely writes:
Good times!
Yup. Another stimulus on the way.
New York's Republican Senate Majority Leader Joseph Bruno said on Wednesday his surprising decision not to seek re-election had nothing to do with a federal probe of his business ties.
NY's Bruno: Probe unrelated to decision not to run
| Reuters
Pull the other one.
"wtf happened at 10:40 this morning to cause the markets and financials to head upwards? PPT?"
The wonderful news about soaring, happy consumer sentiment and rapidly increasing housing prices. It wouldn't surprise me at all to see the Dow flirting with 12K by the end of the day.
3rd time a charm? 11697
Sigh...
I know that... just the abrupt reversal of financials seemed weird, like there was some news that hit the wire. SRS and SKF went from 3% up to negative in just a few minutes.
As we discussed yesterday, Denver is at a 4.5 price to income ratio still. Historical ratio is around 3.0. People buying today have no idea of how clueless they are. But, when they are broke and standing in the food line at the homeless shelter, they will realize how clueless they were. And how hungry they are.
Below I have posted the real price change (adjusted by the CPI-U) from each metro's peak for each of the 20 areas in the Case-Shiller index. I don't think any of us who are regular readers of Calculated Risk are particularly surprised by the results.
I then decided to look at the real price change since January 2001 based on CR's median income/median house price graph, because that was generally before the current bubble. To me, these numbers brought some surprises, like Denver, Dallas & Atlanta being in negative territory. LA & Miami having the greatest run up did not surprise me, but DC being 3rd, as well with NY, Seattle and Portland being 4th, 5th & 6th did. I guess I hadn't thought that creative mortgage lending played as large as a role in those metros. Although Seattle and Portland have fallen less than 10% in real terms, they are both still 37% above 1/2001 prices.
So I went back to January 1998 to compare real prices, and saw that only Detroit & Cleveland are in negative territory, which came as no surprise. But the extent of the difference between 1998 and 2001 in SF, Boston & Denver surprised me. Their bubbles obviously started earlier and were much more tied to the Internet bubble.
The 1998 data shows that LA, NY, SD, DC, Miami, SF and Seattle as well as the Composite 10 are still well above, gt 60%, the real home prices from January 1998. It's hard to imagine that real household income has risen that quickly in all of those areas. Don't know if this has any bearing on future home prices, but it gives pause to ponder some interesting data.
Sorry about the formatting, but I thought I would share it.
Home Values adjusted for Inflation - based on CPI-U\t\t\t
MSA\t\tPeak Mth\t\tChg from Peak\t\tChg-1/1/2001\t\tChg-1/1/1998
Las Vegas\t\tFebruary 2006\t\t-33.85%\t\t28.49%\t\t34.27%
San Diego\t\tNovember 2005\t\t-33.65%\t\t25.22%\t\t73.63%
Phoenix\t\tDecember 2005\t\t-33.05%\t\t24.14%\t\t40.07%
Miami\t\tDecember 2006\t\t-32.97%\t\t48.13%\t\t66.04%
Detroit\t\tDecember 2003\t\t-32.85%\t\t-28.67%\t\t-16.98%
Los Angeles\t\tOctober 2006\t\t-30.48%\t\t48.87%\t\t89.77%
San Francisco\t\tDecember 2005\t\t-29.89%\t\t2.31%\t\t62.54%
Tampa\t\tMay 2006\t\t-29.28%\t\t31.29%\t\t48.08%
Washington\t\tDecember 2005\t\t-25.48%\t\t45.48%\t\t69.12%
Minneapolis\t\tDecember 2005\t\t-25.14%\t\t0.28%\t\t26.64%
Composite\t\tDecember 2005\t\t-24.39%\t\t30.29%\t\t66.60%
Composite-20\t\tDecember 2005\t\t-22.96%\t\t23.18%\t\t
Boston\t\tJune 2005\t\t-20.77%\t\t9.92%\t\t50.64%
Cleveland\t\tSeptember 2004\t\t-19.13%\t\t-14.09%\t\t-9.22%
New York\t\tDecember 2005\t\t-16.47%\t\t40.31%\t\t75.00%
Chicago\t\tOctober 2006\t\t-16.18%\t\t13.17%\t\t26.18%
Denver\t\tAugust 2005\t\t-14.37%\t\t-8.73%\t\t20.56%
Atlanta\t\tOctober 2006\t\t-13.41%\t\t-5.07%\t\t6.89%
Dallas \t\tJune 2002\t\t-11.52%\t\t-7.84%\t\t
Seattle \t\tAugust 2007\t\t-9.55%\t\t37.17%\t\t61.79%
Portland\t\tNovember 2006\t\t-9.55%\t\t37.16%\t\t40.54%
Charlotte\t\tAugust 2007\t\t-6.11%\t\t4.46%\t\t7.63%
TradingStats writes:
3rd time a charm? 11697
Was wondering when you'd show up. Doesn't look like it today and tomorrow it'll be way up above 12000.
A good analogy of Toronto would be Chicago.
And a good analogy of Vancouver would be San Diego.
Vancouver is now showing a market turn with a doubling of inventory since January. Highest inventory gains and reported asking price drops are in the upscale suburb of West Vancouver (not to be confused with the west side of the city of Vancouver). Think La Jolla.
But denial is extra strength in British Columbia - this is where the license plates say "The Best Place on Earth". BC's biggest industry - forestry - has been clobbered, tourism is on the ropes, and the economy is being kept going by, you guessed it, construction.
Agree MS technical bounce for the DOW. We need greater volume to drive lower, just as we needed greater volume in April and May to move higher.
If we take Case/Shiller and OFHEO data at face value (I know, I know...) then what we see is that the big metropolitan areas - subprime and Alt-A included - have a faster pace of price decline, but apparently decelerating, while prime-mortgage home prices are falling more slowly, but the fall is accelerating. That's pretty much in line with prime being a year behind subprime in the downturn. If this works out (remember, this is a face-value look), then we can expect GSE-qualified mortgages to get beaten up worse in coming months, a process that is already underway.
Was wondering when you'd show up. Doesn't look like it today and tomorrow it'll be way up above 12000.
Could be; this being the third time in the latest market swoon that we've visited the 11700 zone, maybe it's time the market genuflect's for a period on this closing number that i've randomly picked. Today, gosh darnit!
CR: "However this could just be seasonal noise, as these cities saw small increases last year at this time too."
The index is a 3-month moving average (delayed by 2 months) so perhaps the blips up in Denver and Cleveland aren't noise after all?
What makes you say that, BB? Tomorrow's a big day for announcements.
MBA Purchase Applications
Durable Goods Orders
New Home Sales
EIA Petroleum Status Report
FOMC Meeting Announcement
Good news? or rally around bad news?
(Totally confused)
Vancouver? I was there on Saturday. All condo living. Nothing wrong with that as long as the economy is strong but just as volitile on the way down and no strong dollar to buffer the decline this time. Both Vancouver and Seattle are incredible economic engines. Think SoCal circa 1970 but with a work ethic and enough bad weather to keep people in their offices all day. I wish I were in the crane rental business there (here actually for a few more days).
Interesting times said "Toronto resale supply is up over 200% this year based on my fixed search in MLS.ca"
Well, that's quite a contrast with the Toronto Real Estate Board 'Market Watch' giving May 2008 data (Google TREB)
"Prices trended upward on a year-over-year basis, with the overall average going to $398,148, up four percent over the May 2007 figure of $382,787. ..Furthermore, inventory has increased 15 per cent to 27,267 listings over May of 2007'
Mind you, perhaps Canada Immigration slipped up and gave Lawrence Yun a work visa.
Vancouver is full of condos now and people now commute to the suburbs to work. A full reversal from 10 years ago where people commuted to the city. Ah yes those Vancoverites are stuborn and will never be convinced their home prices could fall until they do.
RE: optimistic analysis
From "The Great Crash" by JK Galbraith
(In Sept 1928), Andrew Mellon said "There is no cause for worry. The high tide of prosperity will continue."
"Mr. Mellon did not know. Neither did any of the other public figures who then, as since, made similar statements. These are not forecasts; it is not to be supposed that the men who make them are privileged to look farther into the future than the rest. Mr. Mellon was participating in a ritual which, in our society, is thought to be of great value for influencing the course of the business cycle. By affirming solemnly that prosperity will continue, it is believed, one can help insure that prosperity will in fact continue. Especially among businessmen the faith in the efficiency of such incantation is very great."
Patrick - I prefer to believe my two eyes rather than some biased institution.
And BTW, I also don't believe listed prices anymore.
With over 5 years of DAPs in Canada, prices have a long way to drop.
It is fraud. Wire fraud to be exact. And it's time the criminals are caught.
Anonymous Bosch writes:
What makes you say that, BB? Tomorrow's a big day for announcements.
FOMC Meeting Announcement, when one thinks about it, whatever they did in the past they do it to protect the markets.
I am gambling that they are not that impotent that there would be an adverse reaction to whatever they plan to do, at least not yet.
In Denver 35 years. The stats somehow miss the runup. Douglas county was among the fastest growing counties for 15 + years. I wouldn't live there unless I worked from home. They have a water problem, a commute problem, and build schools as though the growth is innevitable. Close in neighborhoods have been drastically changed by pop the tops. The idea that we didn't participate in the bubble is simply not accurate. This used to be a place with a handful of $1m homes, check recolorado.com, there are 1000+ $1m+ homes on the MLS lots have been there for 12 months plus. The stats here lie. We had normal priced housing, but always were top 20 in funny loan stats. My guess is we're behind the curve. I do wish the stats were right, it just doesn't ring true.
Just short Bucky, the 536 A-holes that run our goverment will do the rest of the work for you.
Senate forges ahead with foreclosure rescue bill: Vote :89-3. Buy BAC!
Anon,
No doubt and now their voting to give deadbeats assistance. They passed foreclosure bill today..
Tired of living in peak stupidity years.
Oops make that 83-9. That's more like it.
Is there a rentals series that correspdonds to these classifications? I'd just like to see what the price/rent ratio looks like.
Yes, psychology uber alles. All it takes is for everyone to believe we're in an "economic downturn" (and act accordingly) to make it happen. Of course when people hear "fire" they're more likely to panic if they can smell something burning, even if they can't see any flames yet.
Schillers index exempts new homes, counts only 20 metro areas and counts only resales. Yet, its somehow a gauge of the countrys housing market and he preaches in every outlet that is willing to listen (while selling his books and services).
His method leads to overstating rise in an up market and overstating declines in a down market (especially in the areas of high foreclosures.)
Another one is "affordability index". With percentage of homes inventory available for sale annually being in single digits of overall housing stock, what difference does it make what total % of "median income earners" can be in a market for a home? Especially when considering the fact that income distribution in the country is so skewed towards the top 40% of the earners, the bottom 10% make practically nothing, under $10,000 (with close to 50% unemployment rate?) and 21% of all households make under $20,000? Should we include children 1-7 years old in calculation of % of smoking population too? Do they smoke? Perhaps this is why adult population term exists?
Household income in the United States - Wikipedia, the free encyclopedia
The much more accurate picture of home-buying power and subsequent indexing would be obtained by removing two bottom deciles and taking median of the remaining earning population pie.
When you have Harvard professors putting data that has a self-serving odor to it and the entire financial community eats it as a serum of truth one can be little surprised when rating agencies give out AAA ratings to paper that can be given single A at best even under relatively healthy economic conditions because some bright fellow with a fancy degree applies 5% perpetual appreciation to underlying collateral while making $200,000 doing so. Or that countrys largest banks have 30%+ of their loan portfolio in one market (California) while employing folks with title of Chief Risk Officer?
CR
While I hope that the New York market will crack (need to find a coop for my daughter,I think that it will, as usual be different from (the rest of) the US.
One major reason is the influx of foreigners taking advantage of the weak dollar. Second will be its mass transit infer structure.
Vancouver also seems to be a special class because of the continued influx of Chinese-especially the newly rich mainland Chinese
Senate forges ahead with foreclosure rescue bill
An endless stream of bailouts is pretty much a given so long as nothing stands in the way of the congress.
The question is whether the markets will interfere by dumping on the dollar and US treasuries.
hmmm... Harvard prof with accessible history vs. Anonymous poster citing Wikipedia..... must think...... oh, this is tough. Better sleep on it.
Schillers index exempts new homes, counts only 20 metro areas and counts only resales. Yet, its somehow a gauge of the countrys housing market and he preaches in every outlet that is willing to listen (while selling his books and services).
His method leads to overstating rise in an up market and overstating declines in a down market (especially in the areas of high foreclosures.)
At least in the areas I pay attention to it seems to correspond pretty closely with the decline in list prices. Whereas the sales prices reported by the NAR seem to be much more optimistic.
I've always wondered why people would be lowering their asking prices if sales prices were holding up.
the case-shiller index seems to corroborate the MLS data in suggesting this isn't happening.
Where I am there's almost a 10% difference in the YoY change in list prices and sales prices (reported by the NAR).
Go figure.
I'm thinking we see 2001 price levels maybe 2000 prices again. Untill Banks start foreclosing we are no where close to bottom ( I told Suntrust I want to buy 50 to 100 houses two weeks ago still no phone call ) . 2010 maybe depend on how the fed handles the organized takedown that's going on . Wait till OIL hit's 175 (The week Iran gets bombed ) My guess is mid JULY . Then when oil crashes all market will follow . See you bitches @ the bottom
Datahead @ 11:45, thanks for this. I'm in Seattle and committed to renting until price drops have leveled off (which lately I'm thinking will take longer than I'd originally suspected) -- and to encouraging my friends to do the same; I'll be adding your post to my arsenal in that regard.
We do have a Harvard MBA in the nice piece of property called White House. Sleep tight.
My family mostly lives in the lower mainland not that far from Vancouver, and I have a brother and a BIL who work in the construction industry there. The whole place is completely nuts (affordability is practically non-existent) and they and others are nervously wondering when the housing price boulder is going to start rolling back down the hill. Some small almost imperceptible signs: houses on the market a bit longer than usual, some small decreases in asking prices, and a few extra builder incentives.
When you have Harvard professors putting data that has a self-serving odor to it and the entire financial community eats it as a serum of truth one can be...
Anonymous
Puuuleez. You forgot to provide the NAR shill attribution you are quoting.
Why do most of the anecdotes on this site and graphs ignore NYC when talking about a potential bubble? As far as I can tell (comparing OFHEO prices to BLS rents), NYC has at least as much appreciation as LA and Miami and has seen far less of a correction in the past 24 months.
Is NYC the next shoe to drop?
Both Vancouver and Seattle are incredible economic engines
Please. Vancouver has not one Canadian-class employer, let alone world class. No banks. No manufacturers. No oil companies. No major high tech. No national airlines. It has a median household income about the same as Montreal. So why is it about 70% more expensive than Toronto or Seattle?
What drives Vancouver? Drum roll.. Real Estate! Well that's really sustainable isn't it? -8% savings rate too.
Case-Shiller probably overstates prices changes - somewhat. But there are boom markets not in it and bust markets in (Detroit?). In any case the Case-Shiller markets cover 1/3 of the population and more than half the property value, so it's highly relevant from a macroeconomic perspective. CA/FL/AZ/NV are enough to crash the financial system on their own if the losses hit fast enough.
We're in Denver, in a popular neighborhood (close to downtown and light rail, good schools through middle school, generally walkable, etc.). Our experience is that prices are definitely up a little since early 2007. If you look at the numbers, foreclosures are down in the city, and inventory has been steadily decreasing (seasonally-adjusted) for a few years.
It's just a guess, but I think that the city itself (as well as the more popular inner suburbs) has come through the worst of it. I doubt appreciation will keep up with inflation for the next few years, and the overbuilt burbs are still pretty screwed, but places like Bonnie Brae, Wash Park, Highlands, Capitol Hill, etc., are probably done dropping.
Case-Shiller tracks the purchase price of the same home over time and that has been attributed as one its best strengths. However, low interest rates and "creative financing" have led to larger square footage for newer houses. Wouldn't it be more informative to track the purchase price in real dollars per square foot?
Prices still stable in Hawaii. I'm in Honolulu and it's all still very expensive.But it IS Hawaii:)
This data is Tooooooooooooooootaaaaaaaallll Buuuuuullllshhittttt. SF is not down 23%. I live there and this data is wrong, just plain wrong. If that data point is wrong, how can you rely on anything else?
It's really amazing to me that an index as flawed as Case-Schiller gets as much attention as it does. Take 2 tracts of 100 houses in the same metro area. A is an older stable neighbourhood where the average house turns over once every 15 years (7 houses sell/year). So in a 2 year period, maybe 1 house will sell twice. B is an exurban area where the average house turns over every 5 years (20 sell/year). Here one can easily get 5 houses selling twice in 2 years.
So B, a neighbourhood where there is likely to be a lot of speculation is 5x over-represented. Thus the index will exaggerate on both the upside and the downside. Am I denying that prices went up a lot in 2001-2006 and are now going down? No. But C-S is over-estimating the extent.
(Bruno) said his decision not to seek re-election after 32 years in office was a personal decision that partly stemmed from his desire to spend more time with his family.
Life begins at 79.
lets not forget that one (of manymanymany) properties in DC i bought rehabbed and sold impact the case shiller index. and especially combined with the re-urbanization of the cities, you got garbage data.
In NW DC:
Sold 1999 - 69k
Sold 2003 - 145k (to me)
Sold 2005 - 625k
gee what happened between 03 and 05? well i spent 200k to completely gut (and i mean gut, from the basement floor you could see the sky)(and then we lowered the basement) and the occupy. we sold it in '05, got our cap gains free gain and moved on.
so this property shows what, nearly a 10 fold increase in 6 years?
doesnt take into account the fact that in '99 the 'hood was bombed out. nor that in '03 i spent 200k on it. nor in '05 the largest retail center in DC opened three blocks away from it.
my only point is that this data is efffed
But it's treated as gospel. If it were Case-Schickelgruber no one would give it the time of day.
How would Case-Shiller show big nonexistent price declines? A glut of nuclear reactors built in tony residential areas causing Shillered sales to be disproportionately those of blighted houses? No. Anyone come up with a plausible story?