A Look At U.S. Home Price Performance in 20 Markets

Hickey and Walters (Bespoke) submit: S&P/Case Shiller recently released the March figures for median home prices in the 20 cities they analyze. As many of you know, the Chicago Merc trades futures contracts based on these home-price indices.

Below we highlight the difference between the actual March home price figures and the contract price of the home-price futures expiring in May 2008. As shown, all eleven contracts are indicating increased weakness in the housing market. Las Vegas is expected to decline the most, while San Francisco is expected to decline the least.

click to enlarge

We also made charts of the historical year-over-year monthly percent change in the actual home-price figures for the 20 cities that S&P/Case Shiller tracks. These charts paint a pretty good picture of the severity of the declines in home price appreciation across the board. The one exception is Charlotte, where a decline has yet to take place.

Comments

[Everyday Fi...:]

Not a pretty picture. I was pleased to see you mentioned the Merc futures/options on housing indices. I did a piece on other futures sites that trade world events like US striking Iran's facilities, bird flu reaching US, etc. Nice ways to diversify a portfolio, especially if hedging with stocks/options that stand to gain from these events should they happen. Dan at everydayfinance.

2007 Jun 04 10:54 PM

[whidbey:]

Good data, and its is spilling over into related sectors according to some. California unemployment rose 4.8 to 5.1 in last survey, and Bed Bath and Beyond says consumers are spending less. We are seeing some of that in the NW, but we have been attributing it gas prices. Seattle is not bulletproof even with Boeing and Microsoft we are seeing residential construction slowing significantly. I suspect the Fed has underestimated the effects of housing.

2007 Jun 05 12:08 PM

[kurtlehman:]

As an agent in Las Vegas for the past 6 years, I can agree that prices are going to be pushed downward in the future. The spike in prices over the late 03 through mid 04 period was a vast overcorrection of what was indeed an undervalued housing market. But now with record foreclosures, more bank owned repos and houses advertised as short sales hitting the listings, the inventory is so bloated in the face of demand and affordability that it takes very aggressive pricing to get an offer. Kurt Lehman

2007 Jun 06 12:36 PM

[fmccain:]

As a Charlotte resident I can assure you their numbers won't last. We have over 20 condo projects (possibly 40) in the works within 5 miles of the downtown. The trend is 100% driven by artificial demand (investors) and is based on a population 'estimate' of 20 years from now. You only meet four people in Charlotte; bankers, girls looking for bankers, race fans, and people looking to 'flip' properties.

2007 Jun 06 02:11 PM

[info12:]

If anything this has to be a boon to the savvy real estate investor. Who can now come in and pick and choose what he wants to buy at a low price. In over built areas and markets that show potential but are still weighed down right now by a huge supply and concern that prices will go much lower. What's the best advice you can give--buy in areas that are unique and won't drop further, SF and cities where job market is strong--new companies moving in, Boise, Idaho? For the new investor it might be the time to wait and save....

Our site: investmentpropertiesin...

2007 Jun 12 03:50 PM