Case-Shiller Home Price Index Posts a Record Annual Decline
We should be hearing from the bottom callers any day now:
“The pullback in the U.S. residential real estate market is showing no signs of slowing down,” says Robert J. Shiller, Chief Economist at MacroMarkets LLC. “The year-over-year decline reported in the 2nd quarter of 2007 for the National Home Price Index is the lowest point in its reported history, which dates back to January 1987. On a regional level 17 of the 20 metro areas are showing declines in their annual growth rate from what was reported in May.”
During this cycle, Boston was the first metro area to report negative year-over-year returns, back in April 2006. In June 2007, Boston showed an improvement in its annual rate of decline from the value reported in May, –3.9% versus –4.3% reported in May. Boston has shown improvement since the beginning of the year, where its annual growth rate measured –5.5%. More data however, is needed to determine whether Boston, whose growth rate turned negative before other metro areas, is truly the first metro area to turn around.
Note that its a clean sweep: decreases in every city measured, on a year over year basis:
Table courtesy of TFS Derivatives Corp
>
Sources:
Case-Shiller U.S. National Home Price Index Posts a Record Annual Decline in the 2nd Quarter of 2007
S&P, Aug 28, 2007 09:00 AM EST PDF
http://www2.standardandpoors.com/spf/pdf/index/csnational_release_082857.pdf
Existing Home Sales Slowest in 5 Years
Martin Crutsinger
AP Economics Writer, Monday August 27, 5:11 pm ET
http://biz.yahoo.com/ap/070827/economy.html?.v=13
Home inventories rise to 16-year high
Rex Nutting
MarketWatch, 12:15 PM ET Aug 27, 2007
http://tinyurl.com/2v89t7
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Comments
Shouldn't they start calling it "decline rate" instead of "growth rate."
Posted by: Owner Earnings | Aug 28, 2007 10:40:39 AM
The assumption is that due to population growth, this number should expand over time.
Now that its contracting, its termed a "negative growth rate."
Posted by: Barry Ritholtz | Aug 28, 2007 10:55:15 AM
Boston leading the pack once again! Woohoo!
Posted by: Christopher Laudani | Aug 28, 2007 10:55:16 AM
I recall soooooooo many bottom callers when the Nasdaq was plummeting.
4,500: ok, we've had our 10% correction
4,000: ok, look at the forward earnings PEs. Tremendous value
3,500: Chartology 101 says they are extremely oversold
3,000: Fed model shows they're still great value
2,500: Clearly they needed to fall as they were over priced, but they're done now
2,000: Earnings are what matter, earnings are what matter. Bottom is in. Forward PEs are at historic lows
below 1,500: Everybody stay out until we're clear the bottom is in.
All the while 7 out of 8 guests were bullish. Why? Easy. They earn a % in fees from asset management. Rule #1. Never say anything that will result in the public selling off some of your assets. Same thing is going on. Same shows with vast majority of guests bullish, same spew, same o same o. Although Forbes and Tamney yesterday on Kudlow were the hardest on my stomach in quite some time.
Posted by: Stuart | Aug 28, 2007 10:55:41 AM
Has Greenspan called a bottom lately?
Posted by: GerryL | Aug 28, 2007 11:00:58 AM
Still got plenty of room left to fall......
this winter is going to be bloody.....
Went to a "party" at Del Mar horsetrack as a guest of a title company. I've never heard or seen so much denial. Although the one I went to two weeks ago was even worse (it was a mortgage company) and it consisted of most of the account "executives" lamenting the downturn and raising of shot glasses full of jagermeister to "the death of the 10 year bond".......
These are professionals.............LOL
Ciao
MS
Posted by: michael schumacher | Aug 28, 2007 11:12:32 AM
Population growth rate.
I speculate the growth rate is at the bottom of the wealth spectrum. Children are a hedge for them.
Children for higher income earners are a liability in both cash outlay to rear and the possible legal outlays they are increasingly more responsible for.
On that subject - the iPhone remodel by the kid. Could an adult get away with that? Do I have to keep an eye on him and his parents (keep them safe from harm) or will you MSM?
Posted by: Greg0658 | Aug 28, 2007 11:13:41 AM
PLENTY of vacation/summer homes for sale on Cape Cod, the Hamptons and the Jersey Shore. I'm not surprised prices were up month/month in Boston though...people are buying into towns ahead of the school year. Prices are still headed down.
Posted by: Lloyd | Aug 28, 2007 11:15:57 AM
Actually if Apple was smart, they'd hire that kid PDQ before the competition does.
Posted by: Stuart | Aug 28, 2007 11:30:06 AM
Anyone familiar with the lot prices of The Strand in Dana Point? 8.5 million for less than 11K sf on an oceanfront bluff set the record earlier this year. Apparently, another just sold for $9 million; not sure if it has closed...
http://blogs.ocregister.com/lansner/archives/2007/07/dana_point_home_l_1.html
how many people have this kind of cash? or ability to get a loan and carry it along with the property taxes?
another oceanfront postage stamp property near me has lowered there price by 500K to $6 million.
Posted by: karen | Aug 28, 2007 11:33:02 AM
oil money most likely.......they never have downturns.....
Ciao
MS
Posted by: michael schumacher | Aug 28, 2007 11:42:05 AM
Well, I guess I need to buy David Lereah's new book, All Real Estate is Local. Perhaps he can give me some pointers on which markets are hot.
Posted by: Mike M | Aug 28, 2007 11:45:22 AM
BUY KRAFT...MAC&CHEESE SALES ARE GOING TO SOAR OVER THE NEXT 5 YEARS....
Posted by: jake | Aug 28, 2007 12:16:11 PM
Top Rahmen too... it's like the college days are back again...
Posted by: lauteus | Aug 28, 2007 12:46:37 PM
oh, wait, is rahmen made in China? damn
Posted by: lauteus | Aug 28, 2007 12:56:01 PM
MS,
"oil money most likely.......they never have downturns....."
While I tend to agree with most of your recent opinions, you need to think before you post.
The above is an absolutely ignorant statement.
The reason I am now in a different profession (law) is precisely due to the downturn in the oil industry between '84 and '92.
Perhaps if you actually did your homework you might have discovered there were massive layoffs and consolidation in the oil industry during this period (even here in California).
Nobody then was complaining about the evil oil companies and their 99-cent per gallon gasoline.
Here in central California, wells were being capped by the hundreds as production costs came within mere pennies of the oil price.
Don't kid yourself MS, EVERY industry has downturns.
Posted by: Pool Shark | Aug 28, 2007 1:03:29 PM
when i was in college, rahmen noodles weren t born yet, how depressing.
Posted by: PegofLI | Aug 28, 2007 1:55:51 PM
Naturally, it's Kevin Hassett who calls for the bottom:
http://bloomberg.com/apps/news?pid=20601039&refer=columnist_hassett&sid=a_dqu6AxIdIw
Posted by: Mr. Obvious | Aug 28, 2007 3:41:24 PM
Pool Shark-
Although I should have said that the oil industry meant the billions of dollars that are sucked out of our country "over there"(which is most likely one of the reasons you "no longer work in that industry") I guess I would also have to imply that some of that money could find it's way back to the place of origin. So please take the school boy rap of my knuckles and place it squarely where it belongs...on your's for making MANY assumptions from a one sentence post.
CiaoMS
Posted by: michael schumacher | Aug 28, 2007 4:06:48 PM
"Although I should have said that the oil industry meant the billions of dollars that are sucked out of our country "over there"(which is most likely one of the reasons you "no longer work in that industry")
What the heck is this supposed to mean? Before you accuse others of making "MANY assumptions" about your posts, perhaps you should learn to write more clearly.
You also apparently need to learn more about the oil industry.
btw, grow up
Posted by: Pool Shark | Aug 28, 2007 6:31:37 PM
I'm not the one that made several assumptions.....you did.
and you tell me to grow up...
Nice try.
Ciao
MS
Posted by: michael schumacher | Aug 29, 2007 10:15:33 AM
Boys, boys . . .
Posted by: Mr. Obvious | Aug 29, 2007 11:14:19 AM
Ah, what about Houston, Dallas, and San Antonio? What are they, fourth, seventh, and tenth largest cities in this country? How can you give the "BIG PICTURE" and leave three of the top ten off your list? Ah, because their real estate doesn't fit your statistics.
Posted by: Erik | Oct 4, 2007 10:36:37 PM
Those are the top 10 cities that the Case-Shiller Index tracks:
"The S&P/Case-Shiller Home Price Indices measures the residential housing market, tracking changes in the value of the residential real estate market in 20 metropolitan region across the United States. These indices use the repeat sales pricing technique to measure housing markets. First developed by Karl Case and Robert Shiller, this methodology collects data on single-family home re-sales, capturing re-sold sale prices to form sale pairs. This index family consists of 20 regional indices and two composite indices as aggregates of the regions."
~~~
The basis of the selection is that as representative of the entire country. Speak to Yale Professor Shiller if you do not approve of his index.
And get out of the Texas sun -- the heat is making you goofy!
Posted by: Barry Ritholtz | Oct 5, 2007 7:02:49 AM
Watch San Diego. The fire damage will ignite a building boom which could possibly change housing's downturn.
Posted by: rufus | Oct 25, 2007 6:08:11 AM
