Case-Shiller: Steepest Price Decline On Record

Macromarkets released the December data(.pdf) for the S&P/Case-Shiller Home Price Indices showing a 9.8 percent year-over-year decline for the 10-City Composite Index, the steepest decline on record. Indices for individual cities are shown below:

We reached a somber year-end for the housing market in 2007. Home prices across the nation and in most metro areas are significantly lower than where they were a year ago. Wherever you look things look bleak, with 17 of the 20 metro areas reporting annual declines and the remaining three reporting flat or moderate growth rates. Looking closely at these negative returns, you will see that 14 of the metro areas are also reporting record lows and eight are in double digit decline. The monthly data paint a similar picture, with all metro areas now reporting at least four consecutive negative monthly returns.

In tabular form, the December data looks like this:

Miami showed the biggest annual decline at minus 17.5 percent, followed by Las Vegas and Phoenix that were tied at minus 15.3 percent.

Comments

[Malkiel:]

I'm still waiting for someone in academia or in some Wall Street back office to do the basic research and give the figures for the math that we all know underlies this: what percentiles of consumers make what incomes, and how many of them are in the market for housing? Because price and income are the related factors here, and price clearly got away from income, one would think it in the vital interest of many a party in this economy to know just where prices have to fall to for existing buyers to stop failing and new buyers to start buying. NAR seems to have acknowledged in a recent statement using their own calculations that 5x income is the realistic limit, and one has to believe based on statistics that few of the California homeowners nattering away on HGTV about the value of their $800,000 San Francisco row houses could really afford what they own, so who will crunch the numbers that count here? Why is it so hard to get economists to believe the simple relationship between price and income?

2008 Feb 27 11:20 AM

[Belvedere R...:]

Take a look here:

www.housingtracker.net...

Not academic, but a very clear summary of what you're talking about. It's clear that some metro areas are in a shorter term downcycle from a wave of foreclosures and illiquidity (e.g., Detroit) while others are in for a longer term fundamentals-based downcycle (e.g., LA, SF). Remember that in LA in the early nineties, prices got out of touch with fundamentals and stayed underwater in some areas for almost a decade

2008 Feb 27 01:38 PM