Housing Index's Possible Silver Lining

By Eric Rothmann

Earlier today, one of the key housing indices, the Standard & Poor's Case-Shiller Index, continued to exhibit a negative trend. However, it might be in the process of stabilizing, which could lead to a trough of the current issues by 4Q09-1Q10.

For April, home prices for 20 major cities declined 18.1% year-over-year, with an 18.0% decline for the 10-city index. However, since 2Q06, the 20-city index moderated by nearly 33.0% with the 10-city index off nearly 34.0%, or approximately the same levels experienced in 2003.

We would point out that April 2009 was the third consecutive month that both indices did not continue to accelerate at a record setting pace. Moreover, the yearly losses in 13 metros improved on a month-over-month basis.

While some could view this as the continuation of "Green Shoots," financial institutions, such as but not limited to Citigroup (C) (Snapshot Report), Bank of America (BAC) (Snapshot Report), US Bancorp (USB) (Analyst Report), Wells Fargo (WFC) (Analyst Report) and JPMorgan (JPM) (Snapshot Report), are expected to experience additional financial statement pressures over the next several quarters as mortgage portfolios and the related securities continue to reel from foreclosure pressures in the pipeline.

Comments

[Mad Hedge Fund Trader]

This is a stretch. + There is so much inventory out there it is unbelievable, yet the relentless tide of foreclosures keeps dumping more properties on the market. The sickness has metastasized to commercial real estate which may be the next big shoe to fall. Look at the chart of the Case-Shiller Real Estate Price Index, which shows us back at 2003 price levels. If this were a stock, would you want to buy it? It is starting to take on the flavor of an all out capitulation. Only the 1990-1997 bottom looks safe. Stay away. Rent, don’t buy.

2009 Jun 30 03:19 PM

[sunbakd1]

Just wait! There are so many deliquent loans that the banks can't foreclose on them fast enough. I spoke to someone who has not made a mortgage payment in a year and is still in his condo.

The lender calls andmakes several ongoing attempts to offer a BS loan modification to tack on the unpaid payments $10,800) to the balance. The borrower says: hose that, the condo is worth less than half of what I owe on it, why would I agree to paying you anything more? Reduce the loan to what the condo is actually worth and we'll talk. He is still living rent/mortgage free.

2009 Jun 30 03:59 PM

[Cold Reality]

"...Possible Silver Lining..."
"...might be in the process of stabilizing..."
"...could lead to a trough..."
"...did not continue to accelerate at a record setting pace..."

This is language and writing that is laboring very hard and stretching to a considerable degree to try to make a case for the "silver lining."

Some may, indeed, view this as more of the "green shoots" that have gotten a brisk spray of Round-Up over the last few weeks. Others may view it as classic "whistling past the graveyard".

2009 Jun 30 07:16 PM

[Cold Reality]

"...Possible Silver Lining..."
"...might be in the process of stabilizing..."
"...could lead to a trough..."
"...did not continue to accelerate at a record setting pace..."

This is language and writing that is laboring very hard and stretching to a considerable degree to try to make a case for the "silver lining."

Some may, indeed, view this as more of the "green shoots" that have gotten a brisk spray of Round-Up over the last few weeks. Others may view it as classic "whistling past the graveyard".

2009 Jun 30 07:16 PM

[Fighting Yoda]

The C-S ease in April is similar to last year when price drops tamed starting April thru August then accelerated from September. Something seasonal about it – of course summer is the moving season. With more job losses and foreclosures –price drops likely will not abate.

2009 Jun 30 09:44 PM

[Ted Hurlbut]

I believe we're in a bottoming phase overall, but the housing market is likely to be a drag on any recovery. There's still too much inventory and unemployment is driving fresh foreeclosures. Housing may have led us into this, but it's not going to lead us out. And the anticipated problems in the commercial real estate market will only increase the headwind.

2009 Jul 01 12:51 PM

[Ted Hurlbut]

I believe we're in a bottoming phase overall, but the housing market is likely to be a drag on any recovery. There's still too much inventory and unemployment is driving fresh foreeclosures. Housing may have led us into this, but it's not going to lead us out. And the anticipated problems in the commercial real estate market will only increase the headwind.

www.hurlbutassociates.com

2009 Jul 01 12:52 PM