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  1. S&P/Case-Shiller Home Prices in “Downward Spiral With No Relief in Sight”

    By on May 31, 2011
    This morning the S&P/Case-Shiller Home Price Index for March was released.  The report is a three month moving average with a two month delay.  The report was not good, which was pretty much in line with expectations.  The index now shows that home prices fell 4.2 percent (not seasonally adjusted) in the first quarter of 2011, following a 3.6% (NSA) drop in the fourth quarter of 2010.  Home prices are now at levels seen in 2002.  David Blitzer, Chairman of the Index Committee at S&P commented:
    “This month’s report is marked by the confirmation of a double-dip in home prices across much of the nation. The National Index, the 20-City Composite  and 12 MSAs all hit new lows with data reported through March 2011. The National Index fell 4.2%  over the first quarter alone, and is down 5.1% compared to its year-ago level. Home prices continue on their downward spiral with no relief in sight.  The rebound in prices seen in 2009 and 2010 was largely due to the first-time home buyers tax credit.  Excluding the results of that policy, there has been  no recovery or even stabilization in home prices during or after the recent recession. Further, while last year saw signs of an economic recovery, the most recent data do not point to renewed gains”.
    Over the past year, home price declines have been the steepest in Minneapolis (-10.0%), Phoenix (-8.4%), and Portland and Chicago (both declining 7.6%).  Only Washington saw positive growth over the year, gaining 4.3%.  From February to March, price declines were the worst in Minneapolis (-3.7%), Charlotte (-2.4%), and Chicago (-2.4%).  Only Washington saw positive month to month growth.
    Other popular home price indices are generally in agreement with Case-Shiller, although they all have different methodologies and are measuring somewhat different things:
    • The CoreLogic Home Price Index for March (which is an average of January, February, and March) showed a 7.5% year-over-year price decline, with declines accelerating from 5.8% y-o-y in February.
    • FHFA’s Home Price Index was down for the 5th straight month in March, falling 0.3%.
    • The RadarLogic RPX Home Price Index is at the lowest point since March of 2003, and is 36% below it’s peak in mid-2007.

     

    Category: Mortgage Rates

  2. S&P/Case-Shiller: Home Prices Decline, “Another Weak Report”

    By on November 30, 2010

    This morning S&P/Case-Shiller published their Home Price Index for September.  “Broad-based declines in home prices” were discovered, as home prices dropped 2.0 percent in the third quarter of 2010, after rising 4.7 percent in the second quarter, mostly due to the first time home buyer tax credits.

    Across the nation home prices are down 1.5 percent from September 2009.  Additionally, home price declines were recorded in 18 out of the 20 metropolitan statistical areas measured in the survey.  Although home prices are above their spring 2009 nadir, they are once again trending downward, leading to fears that the dreaded double dip is about to manifest itself.

    Said David M. Blitzer, Chairman of the Index Committee and Standard & Poor’s:

    “Another weak report; weaker than last month.  The national index is down 1.5 percent from the third quarter of last year and 15 of 20 cities are down over the last 12 months.  Other than Tampa, FL, there are no new lows this month but many analysts will argue that a double dip will be confirmed before Spring.  While some of the bad number may reflect the end of the government’s tax inventive for the first time home-buyers, there are other problems weighing on the housing market.  The national economy is certainly the number one issue for housing.  Additionally, there is a large supply of houses on the market and further, hidden, supply due to delinquent mortgages, pending foreclosures or vacant homes.  New construction is running at less than half the pace needed to meet normal demand, so a sustained recovery could be a ways off”.

    Continue Reading…

    Category: Mortgage Rates

  3. Case Shiller: Housing Prices Steady in July, Show Signs of Weakness

    By on September 28, 2010

    Just a quick post here:  this morning the S&P/Case Shiller Home Price Index was released for the month of July.  The report showed that home prices were stable in July.  On average, housing prices are still up year-over-year, with the 20-city composite up 3.2 percent from July 2009.

    When looking at this report, it is very important to realize that this is a three month moving average that lags behind two months.  As a result, it is pretty far behind what the market is doing right now.  When the October and November reports come out, expect to see declines in home values as the effect of government stimulus will largely be absent from those reports.

    There are already signs of price erosion in the report:

    “With July’s data, 10 of the 20 MSAs are reporting negative annual growth rates.  With June’s report only five cities were negative on an annual basis – Atlanta, Cleveland, Dallas, Denver, and Portland all fell back to reporting declining annual growth rates.  The three cities in California, Los Angeles, San Diego, and San Francisco, showed the strongest annual growth rates of +7.5%, +9.3%, and 11.2%, respectively; but these too are weaker than June’s print.”

    Then we have this quote from David Blitzer, Chairman of the Index Committee at Standard and Poor’s to drive the point home:

    “The next few months may give us an idea of the true strength of the housing market, as the temporary economic stimuli will have ended.  Housing starts, sales, and inventory data reported for August do not show signs of a robust market, and foreclosures continue.”

    Declines in housing prices after the withdrawal of the first time homebuyer tax credit have been predicted for months.  It appears we are right on the verge of seeing that happen.  If prices start to decline again, it will be very interesting to see what actions, if any, our government takes.  If prices begin to fall again, do you think our lawmakers will attempt to intervene?  Or will the market be allowed to bottom out?  Let me know your take in the comments section below.

    Category: Mortgage Rates

  4. Home Prices Rise in June Due to First Time Homebuyer Tax Credit

    By on August 31, 2010

    S&P Case Shiller released their Home Price Indices for the month of June today, and it showed an increase in U.S. home prices.  Prices rose 4.4 percent in the second quarter of 2010, following a 2.8 percent decrease in the first quarter.  It is important to note that this index is a three month average with a two month lag.  As a result, it measures conditions as they were several months ago.  All current indicators point to home prices falling, and the report itself states “housing prices have rebounded from crisis lows, but other recent housing indicators point to more ominous signals as tax incentives have ended and foreclosures continue”.

    From the report

    “The monthly Composites cover June and the national index covers the second quarter, when the government’s program for first time home-buyers was winding down.  While the number are upbeat, other more recent data on home slaes and mortgages point to fewer gains ahead,” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s.  “Even with concerns about near term developments, we recognize that the housing market is in better shape than this time last year.  Further, California’s cities have moved from some of the hardest hit to three of the four leading cities based on year-over-year gains”.

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    Category: Mortgage Rates

  5. Home Prices Falling Despite Low Mortgage Rates

    1 By on July 27, 2010

    Look out below...

    The fine bloggers over at Calculated Risk have a good article today about the future of housing prices.  In essence the article asserts that there have been declines in home values in both May and June that have yet to fully show up in many measures of home prices.

    This premise is based upon data from Campbell Surveys that shows prices for short sales fell 6.3%, move-in ready foreclosures fell 6.8 percent, and non-distressed properties dropped 4.6 percent.

    The decline can likely be traced to several factors.  First is the collapse in demand for homes following the expiration of the first time home buyer tax credit at the end of April (the overall weakness of the economy also plays a part in the lack of demand).  The next factor is the massive overhang of houses on the market and in the hands of banks and lenders.  Finally, the sheer volume of foreclosed and distressed homes negatively affects the price of homes.

    The article says that these declines will not show up in home prices indices such as the Case-Shiller index until later in the fall because the index is a three-month composite that lags two months.  Further complicating matters is that there is a delay between signing a purchase contract and closing on a home.  The sales are not reported and considered final until closing.

    I suppose the takeaway is this: housing prices are falling right now, although many indices will not show this drop-off for some time.  This is something to bear in mind if you are buying or selling a home now or in the near future.  But then again, if you are buying or selling a home, none of this is news to you.

    Category: Mortgage Rates

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