No housing recovery despite all the hoping.
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Case Shiller Report: Down
By Jeff Harding, on March 27th, 2012
The Case-Shiller home price index for January, 2012 came out today showing monthly (0.8%) and yearly (3.9% and 3.8%) home price decreases in its 10- and 20-city indices:
Home Price Indices, the leading measure of U.S. home prices, showed annual declines of 3.9% and 3.8% for the 10- and 20-City Composites, respectively. Both composites saw price declines of 0.8% in the month of January. Sixteen of 19 MSAs also saw home prices decrease over the month; only Miami, Phoenix and Washington DC home prices went up versus December 2011. (Due to delays in data reporting, the January 2012 index values for Charlotte are not included in this month’s release). Eight MSAs and both Composites posted new index lows in January. The 10- and 20-City Composites recorded marginal improvements in annual returns over December 2011 when they each posted -4.1%. In addition to the Composites, Dallas, Denver, Miami, Minneapolis, New York, Phoenix, San Diego, Seattle, Tampa and Washington DC saw their annual rates improve compared to December; while nine of the MSAs saw their annual returns worsen compared to what was reported for December 2011. Denver, Detroit and Phoenix were the only cities to post positive annual growth rates of +0.2%, +1.7% and +1.3%, respectively. Atlanta again posted the lowest annual (and only double-digit negative) return at -14.8%.
As noted, all cities declined except Miami, Phoenix, and Washington DC. Miami and Phoenix were the epicenters of the over-building epidemic. Washington is growing because government is expanding.
Prices are back to 2003 levels: a decade of building wiped out.
The percent changes were as follows:
The word “bottom” is being thrown out these days. I believe that depends on your market and the level of overbuilding. Places like Miami and Phoenix are seeing an influx of investors seeking cheap sunbelt homes. This wouldn’t be the first time people have thought we have bottomed out. My guess is that some markets are bottoming out. But I don’t think on a national basis that we are seeing stabilization because of the still large overhang of the shadow inventory–those homes about to be foreclosed, likely to be foreclosed, and homeowners who are upside down in their property.
Here is the market data:
Much of the impact of foreclosure activity, and thus home prices, is related to the start-stop impact of various government programs and announcements regarding the rights and duties of homeowners in a foreclosure, plus aid programs. It appears that foreclosures have stepped up again. Before buying, determine your local market and the level of overbuilding (inventory), the size of the shadow market, and that should give you an idea of where you are in the cycle. |
