Case-Shiller Index Falls By Record 4.5%

The S&P/Case-Shiller U.S. National Home Price Index fell a record 4.5 percent in September from year-ago levels - Florida appears to be leading the way down.

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The chart above is compiled from data at MacroMarkets where the nation's leading measure of home prices is updated monthly.

The most recent data is shown in tabular form below - Seattle (+4.7 percent), Charlotte (+4.7 percent), Portland (+2.2 percent), Atlanta (+0.4 percent), and Dallas (+0.2 percent) are the only cities in the 20-city index with year-over-year gains.

All of the former high-fliers at the top of the chart above are in a steep decline, led by Tampa (-11.1 percent) and Miami (-10.0 percent).

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Robert Shiller had the following comments:

The declines in the national figure are notable for two reasons. First, the 3rd quarter decline, at 1.7%, was the largest quarterly decline in the index’s 21-year history. And, second, the year-over-year decline posted its second consecutive record low at -4.5%. Consistent with prior 2007 reports, there is no real positive news in today’s data. Most of the metro areas continue to show declining or decelerating returns on both an annual and monthly basis. All 20 metro areas were in decline in September over August. Even the five metro areas that still have positive annual growth rates -- Atlanta, Charlotte, Dallas, Portland and Seattle -- show continued deceleration in returns.

Given how far prices have risen in some areas and the current state of affairs in mortgage lending, it's a good bet that this new record will be broken in the fourth quarter.

Comments

[ForrestGumpInvestments]

Everyday more Economist’s like Robert J. Shiller are expressing concern that the threat of a recession is coming, but there are plenty of other clues that we are facing unprecedented risks. Consider publicly traded Real Estate Investment Trusts ( REIT). Over the last few years most REIT’s performed extremely well. But the fundamentals are deteriorating and the trading values that took years to build could potentially be wiped out in as many months by the those nasty stock market vultures and fast buck artists commonly known as short sellers. Take Equity One (ticker: EQY) as an example of the perfect storm. Equity One is traded on the New York Stock Exchange. While Equity One’s exposure is nationwide it is based in Florida and so is a huge chunk of its portfolio. The double whammy facing Equity One is that unlike a diversified REIT it primarily invests in “retail” real estate. Equity One disclosed in the latest supplement to it’s quarterly report that its overall vacancy rate is already over 6%, but the shocker is the fact that the rate almost doubles (to a little over 12% vacancy) when the tenants shop is less 10,000 sq ft. The real danger for Equity One is that this group of tenants represents over 70% of Equity One’s shopping center revenue. When you consider that less than 30% of Equity One’s current shopping center tenants are Anchor’s (defined as having over 10,000 sq ft.) you really get goose bumps because at least the bigger retailers have the capital reserves to weather the storm. …And you thought only Realtors and builders had it bad.

[Rocktex]

I read a CNNmoney report right after Dr. Shiller has his press release conference.

Hardly for me to accept that Shiller Index is the most reliable vehicle to judge the trend of our housing market as CNN claimed. I wrote some articles using real cases to express viewpoints on the discreditibility of median or average housing price.


I believe Dr. Shiller invented his Index based on median prices. It is out of touch of the reality. Simply put, it is a phantom concept created in the Ivory Academic Tower.

After my discussion with my appraiser/ partner two days ago, I have re-enforced my belief that there is a better way to realistcally do a "real time" quote to reflect the current housing price or market trend as we have done it in the stock market.

Sure there is more time lag needed compared to the real time quote we have in stock market. It might be done in 1-2 days in some metropolitan areas, not like a month delay needed for the Case/Shiller's Index.

It is absurd to have Case/ Shiller' Index as a DJ or SP Index and see people accept it as those dot.com.

[Rocktex]

Sorry, I forgot to mention one vital point that Dr. Shiller is totally wrong by saying "the housing cycle is very important to the business cycle, according to Shiller. Most economic recessions are preceded by housing declines housing downturn." He said the recession possiblity we may have is 50%. What a saying: a housing downturn leads to a economic recession?

What is the cause and what is the conseqence? How does Dr. Shiller concludes that housing distress cause a recession? Or what is the base for him to say such a cause/ recession relationship? I have no idea.

However, It is not true in history. Usually, it should be a recession cause a depressed housing market.

Do we have a reverse situation here today? Even I believe that a recession is possible long time ago. But it is just a cyclical economy. Hardly to have a sufficient evidence to say a housing situation is the cause, not the consequence.

Basically we agreed that an irrational exuberance of dot.com leads us to have a housing downturn in SF area in early 2002. That means we agreed that dot.com bubble is the cause. How can we now change the tune to say it in a totally reverse way if the epicenter is at the reckless credit bubble created by the Wall Street? Is there any reasonable logics or a cover-up behind the scene to excuse the irresponsibility of those financial speculators?

To me, a speculator in stock is a gambler in Vegas. They have to take the consequence (loss) and blame themselves. When a bunch of gamblers lost their shirtsand drop shoes in Vegas, is it going to create big chaos to the general publics? Why those Wall street speculators cry loudly all the way to ask a bail out plan or a "forced" inflation to ease their paper loss at the expense of all the tax payers?

In short, I don't think it is going to have serious effects on the life of majority of us, if FED can resist their massive propaganda, stay firm on evaluating a more broad picture and take right moves.