Estimated Change in Home Prices

The CME housing futures that track the S&P/Case-Shiller median home price indices of 10 major cities offer a clue into how much more investors think home prices have to fall. In the chart below, we highlight the percentage difference between the October '08 actual Case-Shiller numbers (the most recent set of numbers) and the current price of the November '09 futures contracts.

The composite 10-city November '09 contract is currently trading 12% below its October '08 level. San Francisco is expected to fall the most in 2009 at -18%, followed by Los Angeles (-16.6%), and Las Vegas (-13%). The rest of the cities are expected to fall less than the composite, with Boston home prices expected to fall the least at -6%. Miami, Denver, DC, and San Diego are all expected to see home prices fall by less than 10% from 10/08 to 11/09.

click to enlarge

Comments

[John Lounsbury:]

Interesting observation. This is at the low end of the range that I and other analysts have estimated for the price fall to the bottom (estimated by most to be between late 2009 and mid 2011). Estimates reported in a recent SA article ranged from 12% to 30% lower (national average - CSXR) with the average of seven analyst estimates to be -20%. I don't know how the CSXR estimates shoudl be related to the 10-City Composite.

Jan 13 12:04 AM

[PASTOR TOM:]

GOOD DAY FOLKS.

RECENTLY ONE OF MY CUSTOMERS SAID:

"NOBODY IS BUYING ANYTHING"

AND IT SEEMS THAT WAY IN MY SALES OF MY INVESTMENT PROPERTIES.

MAY THE LORD BLESS AMERICA, "IN GOD WE TRUST."

Jan 13 10:34 AM

[D. McHattie:]

I'm not sure what investors in the case-shiller futures could be thinking. Miami is only going to fall another 7% in 2009?

I had thought, once 60 Minutes showed the graph of alt-a and option arm mortgage resets that many of us have been looking at for over a year, that everyone would see the writing on the wall for house and condo prices. But I guess not.

Jan 13 11:10 AM

[Griz:]

I've been thinking of writing a book on "How to Live for Free" as a squatter in many of the vacant homes across Southern California; would anyone be interested in receiving a copy?

Jan 13 11:53 AM

[lodgegoat:]

if it includes a skaterboarders roadmap to empty pools, yes.


On Jan 13 11:53 AM Griz wrote:

> I've been thinking of writing a book on "How to Live for Free" as
> a squatter in many of the vacant homes across Southern California;
> would anyone be interested in receiving a copy?

Jan 13 12:08 PM

[puzzled by ...:]

It seems that the Miami futures index decrease has not changed from the mid 40s level, which is where it was more than a year ago... this is despite the fact the Case Shiller medium home price data shows that Miami has already dropped 38% from its peak. Further it has been dropping a couple percent per month in the past few months. That means if the actual decrease continues at its current rate for 3+ months, then it will reach its bottom and will not drop further after four more months. Seems very unlikely. I think the futures index might be asleep at the switch, or perhaps is testing the power of wishful thinking...


On Jan 13 11:10 AM D. McHattie wrote:

> I'm not sure what investors in the case-shiller futures could be
> thinking. Miami is only going to fall another 7% in 2009?
>
> I had thought, once 60 Minutes showed the graph of alt-a and option
> arm mortgage resets that many of us have been looking at for over
> a year, that everyone would see the writing on the wall for house
> and condo prices. But I guess not.

Jan 13 07:05 PM

[MiamiCondof...:]

The Miami projection is absolutely absurd! Miami is going to get demolished in the next year. miamicondoforum.com

Jan 14 12:24 AM

[Mark in SF:]

Griz: "I've been thinking of writing a book on "How to Live for Free" as a squatter in many of the vacant homes across Southern California; would anyone be interested in receiving a copy? "

Start a blog. I bet you'd get lots of traffic.

Jan 14 12:35 AM

[Yoski:]

Miami only going to fall another 7% from 10/08? That means we've hit bottom here in Miami. Prices are still unaffordable, jobs are drying up but we've hit bottom!? NOT!

Jan 14 06:44 AM

[puzzled by ...:]

Moody's is predicting that Miami prices will drop an additional 40+% from current levels - which makes more sense when you consider that 2008 Miami foreclosures (at 56,000) have increased by 111% from 2007 and it takes months for these backlogged foreclosures to work their way onto the market, plus all the new inventory from 2008...

Jan 14 08:24 AM

[Chris Who S...:]

Barney Frank is thrilled, but he too is puzzled by the 7% Miami drop prediction. He hopes for another 25-30% drop nationally so he can have even more power over the depression he has brought on to us almost singlehandly. Good job Barn!

Jan 14 09:08 AM

[cashRich:]

People it is long over due! Prices have been ridiculous for wayyyy too long. Keep your credit in good standing, save your money and keep going to your job. This time you will be rewarded as you should be. American dream is coming. Don't buy until 2011 (at the soonest!) Don't feel sorry for the agents, lenders etc. they made a fortune off of other's misery. Karma Earl!

Jan 14 09:14 AM

[Donnie B Good:]

The Lord is judging America for dropping bombs on innocent people who did not do anything to us, ie Iraq.


On Jan 13 10:34 AM PASTOR TOM wrote:

> GOOD DAY FOLKS.
>
> RECENTLY ONE OF MY CUSTOMERS SAID:
>
> "NOBODY IS BUYING ANYTHING"
>
> AND IT SEEMS THAT WAY IN MY SALES OF MY INVESTMENT PROPERTIES.

>
>
> MAY THE LORD BLESS AMERICA, "IN GOD WE TRUST."

Jan 14 10:20 AM

[hazel:]

Sorry, but the above graph does not accurately assess the housing situation. CME Real Estate futures are extremely illiquid, with DEC 2008 volume totaling 37 contracts traded. That's right, 37.

Jan 14 11:26 AM

[susu123:]

cool idea. yeah I imagine many will be interested as they lose their jobs.


On Jan 13 11:53 AM Griz wrote:

> I've been thinking of writing a book on "How to Live for Free" as
> a squatter in many of the vacant homes across Southern California;
> would anyone be interested in receiving a copy?

Jan 22 10:10 AM