Case Shiller Housing Composite: Worst Since 1991

Pretty amazing: This data release (May 2007) marks the 18th consecutive decline in growth, dating back to December 2005. As the chart below shows, annual returns of the Case Shiller Composite now show continued negative annual returns -- an annual decline rate of 3.4%.

These place the national market for real estate and single family homes at levels not seen since the summer of 1991 (the 20-City annual decline rate is 2.8%).

Excerpt:

“At a national level, declines in annual home price returns are showing no signs of a slowdown or turnaround,” says Robert J. Shiller, Chief Economist at MacroMarkets LLC. “Year-over-year price returns are continuing to either move deeper into negative territory or experience persistent diminishing returns. If there is any positive news in these numbers, it may be that in both May and April eight of the 20 markets showed positive monthly growth rates. This compares to only one or two of the 20 in the late winter and early spring. We need a few more months of data, however, to determine if this is the beginning of a national turnaround, since the national trend is still at a sharp deceleration.”

With Chicago now reporting negative annual returns, 15 of the 20 metro areas are now reporting negative annual price returns. In addition, 16 of the metro areas saw a decline in their annual growth rate compared to April’s data. Detroit continues to lead the metro areas in growth rate declines, down 11.1% from a year ago and has been in annual decline since May 2006 . . .

Pretty astonishing fall from the peak. And, based upon inventory levels and present sale rates, we are not remotely close to done.

Case Shiller Home Price Index

chart courtesy of Standard & Poors

Here is the break down via Tradition Financial Services, Inc. / TFS Derivatives Corp.

	S&P/Case-Shiller Index - May 2007
	May 06	Apr 07	Apr 07R	May 07	Apr07 v May07	Apr07 v May07	May06 v May07
Bos	178.61	169.60	169.60	170.95	1.35	0.80%	-4.3%	Bos
Chi	166.61	165.87	165.87	165.68	(0.19)	-0.11%	-0.6%	Chi
Den	138.31	134.86	134.86	136.32	1.46	1.08%	-1.4%	Den
LV	234.39	226.65	226.65	224.79	(1.86)	-0.82%	-4.1%	LV
LA	272.12	263.36	263.36	263.19	(0.17)	-0.06%	-3.3%	LA
Mia	278.68	273.53	273.53	269.52	(4.01)	-1.47%	-3.3%	Mia
NY	215.57	211.65	211.89	210.69	(0.96)	-0.45%	-2.3%	NY
SD	249.15	232.64	232.64	231.80	(0.84)	-0.36%	-7.0%	SD
SF	218.37	211.47	211.47	210.89	(0.58)	-0.27%	-3.4%	SF
WDC	251.07	235.29	236.17	235.15	(1.02)	-0.43%	-6.3%	WDC
Comp	226.00	218.93	219.01	218.37	(0.64)	-0.29%	-3.4%	Comp

Source:
Late Spring Numbers Bring Chilly Returns According to the S&P/Case-Shiller Home
Price Indices (pdf file)
S&P, July 31, 9:00 AM EST

Comments

[Johnny Bitc...:]

Unfortunately all housing price data comparisons which are not adjusted for capital improvements is so flawed as to be almost worthless. Shillers data is probably better than the median figure from the Commerce Department but it's still very flawed and deceptive.

I really have no idea why people would even use these indices, and it's just ridiculous to hedge based on them. In addition to the capital improvements problem, there are all sorts of problems with cash back and incentives - not sure how Shiller deals with this, but my guess is that there is no way to account realistically for side deals.

Anyway, the most interesting stat I have seen relates to the California market and goes something like this:

Sales levels have dropped to early/mid 90's level !

What makes this so amazing is that this is true even amidst a much greater poplulation and level of inventory. Think about it......that's a dramatically telling statistic.

And the jokers in $800,000 pieces of trash 2-20 miles inland will be muttering these bromides all while their houses drop 40%:

- they are not making any more land

- i live close to the ocean (save for the fact that 1% of them actually ever go to the beach and take advantage)

- bla, bla, bla.........

The lucky ones are the ones that actually do have location, location, location and can walk to the beach or actually see the ocean without creating some phony crow's nest on their roof !

1 in 1000 houses in California actually has location, location, location. Most of the rest have traffic, traffic, traffic, smog, smog, smog, dense, dense, dense, illegales, illegales, illegales, taxes, taxes, taxes.................... I am not even going to get into the fake blonde fake tit bimbo's that are either looking for a rich man or recently decided to become real estate agents: oooh, that's a nice house.....oooh, the school's here are really good......oooh, California real estate is a good investment...............

Can you imagine what idiot would pay $800,000 for a tract home which signs you up for a $1000 per month tax bill ? It's a true comedy, though tragic for many..........

Even worse yet is the government employees racking up salaries and pensions based on phony property assessments..........

Guess what folks ? Homes are not good investments, and never really have been. They are a store of value, and there have been times where large profits can be made, but in the long sweep of history they keep up with inflation and all the while you are paying rent to the bank and maintenance.

Boy how times have changed.

john

2007 Jul 31 03:07 PM

[Carl leason:]

Hi John,
I have to partially agree, but have some exceptions,...
Having been a Realtor for the past 25+ years, it is not LOCATION, LOCATION, LOCATION,,,
It is more correctly,.. Location, Price and Condition ! No question that California is way overpriced but a large part of the problem is Gov. interference in the matter. By that I mean, Super high R.E. Taxes in many locations, especially ,..where I live,..FLorida,..taxes doubled from the period 2001 to 2005 making homes unaffordable because a buyer may be able to afford the Mtg. but when you add outrageous taxes and Insurance, , you loose the buyer !! Also Fl is not a high pay state ! But to make matters worse, we were invaded by investors about 2001 ( after the stock mkt. crash ) and they were all suddenly "flipping" homes , as if they were experts,...Now we have 4 times as many properties on the market, all overpriced, and half the number of buyers !!
If the brilliant investors would just do the math,...like with 20-30 pct. down,...will the place pay for itself ?? At this point the homes don't, so we have the present glut of homes for sale and no buyers, To top it off, Insurance has gone up by thousands $$$ per year ! A quick summary,..4 times the number of homes on the market, and half the buyers !! That spells disaster,..anywhere !
Another part of the problem is that builders were building on every sq. ft. of land they could find, and now are selling at greatly discounted prices, offering huge commissions, and many incentives , upgrades,.. for their new homes that are sitting empty for well over a year in many cases.
Investors have a "Herd" mentality, and until they smarten up, nothing will change. ! Even the great Donald Trump backed out of a big development in Tampa ! I have to admit that Donald was smart enough to not invest any money in it, just lent the use of his name for a price and when it didn't work, he backed out !! It will take years for FL to again become a logical place to retire...if ever ! LC

2007 Aug 01 08:00 PM