Edward Harrison

Case-Shiller: House Prices Up for Second Consecutive Month

Case-Shiller looks at 'sale pairs' data to make an analysis i.e. a sale of the same house in two different periods. The sales data includes all arms-length transactions available for these pairs. This includes distressed sales like foreclosure and short sales.

They describe it like this:

For each home sale transaction, a search is conducted to find information regarding any previous sale for the same home. If an earlier transaction is found, the two transactions are paired and are considered a “repeat sale.” Sales pairs are designed to yield the price change for the same house, while holding the quality and size of each house constant.

All available arms-length transactions for single-family homes are candidates for sale pairs. When they can be identified, transactions with prices that do not reflect market value are excluded from sale pairs. This includes: 1) non-arms-length transactions (e.g., property transfers between family members); 2) transactions where the property type designation is changed (e.g., properties originally recorded as single-family homes are subsequently recorded as condominiums); and 3) suspected data errors where the order of magnitude in values appears unrealistic.

More information is available in PDF form here:
www2.standardandpoors....


On Aug 25 11:13 AM NEOblogger wrote:

> Can someone please confirm for me if the Case Shiller index does
> or does not include data from foreclosures and short sales? I have
> read in the comments section on various occasions that is does not,
> but found nothing authorative.
>
> If this is true, then I am not sure we are getting a true picture
> of the market if we are excluding 30-40% of the market activity (according
> to NAR), especially as all of this would be on the low side.
>
> I would really appreciate if someone could clear this up for me.

Existing Homes Sales - Another Bullish Data Point

Roger,

My sentiments are more in line with yours. The post title is NOT what I would have chosen. On my site it is "Existing home sales add to the parade of bullish data" which I chose to mean: this is an undeniably bullish data point amongst a host of others recently. But let's wait to see if this is just a statistical recovery or something more sustained.

My view is that the data has to plateau at some point. That point seems to be now. That hardly means we are off to the races. Let's see what comes next.

Seeking Alpha keeps making up titles to my posts that I don't like. Like "Bullish Data in Euroland." I find this very annoying.

Jim the Realtor: Touring the Housing Problem

That's some good anecdotal evidence as well, John. Thanks. What I did find somewhat heartening by the videos is that Jim says there wasn't a ton o shadow inventory to choose from on his beat. San Diego is one of the worst hit markets, so they are a sort of canary in the coalmine. The trends there in terms of price appreciation and then crash led the rest of the country. I suspect the same will be true in terms of REO.


On Jul 22 09:26 AM John Lounsbury wrote:

In my small sub-division, there have been four sales so far in 2009 compared to one for all of 2008. Houses on the market (in my subdivision) have been about equal in number both years. The sale prices in 2009 have averaged about 10% less than 2008 asking prices. This is for an area in North Carolina that did not have the dramatic price bubble that many other areas of the country saw, but did experience overbuilding (in my opinion) 2004-2007.

More Reckless Home Lending, Courtesy of Fannie and Freddie

Loan Survivor, It's not bad for banks. It's good for banks. This is the scenario:

I have a house with a mortgage. That house has declined n value. While everyone else is out refinancing their mortgage at lower cost. I am stuck with the mortgage I have because I am in negative equity. What do I do?

Normally, I would either stick it out with the present terms. Or if my state is a non-recourse mortgage state like California, Florida or Arizona where house prices have fallen dramatically, I can just walk away.

This adds a third option i.e. the ability to refinance at a lower interest rate. The sticking point of course is that I am trading a non-recourse loan for a recourse loan.

In my view, this is a bad trade - and also predatory because most people will no know that they have made this trade. As for the bank, it continues to receive payment instead of having an empty property and being forced to write down the mortgage.

End result: Great for the lender/MBS holder who gets the payment and a recourse loan, giving it more assets and income as security. Bad for the mortgagee who, despite a potentially lower payment, is shackled to the house via a recourse loan for MUCH more than the home's present value.

On Jul 03 03:37 PM Loan Survivor wrote:

> Edward, please explain how the 125% LTV program on only exisiting
> FNMA/FHLMC debt will be bad for banks?
>
> The only facts you present are that HBOS in the UK had problems because
> they offered 125% PURCHASE loans.
>
> We're talking 125% LTV REFINANCE loans here that FNMA/FHLMC are already
> on the hook for, meaning taxpayers are on the hook.
>
> If lowering interest rates to lower payments, means taxpayers have
> to bailout fewer foreclosures, why are you against that?
>
> Before responding, please read my post that discusses this in detail
> and addresses many of the misplaced concerns about the porgram -
> seekingalpha.com/insta...

More Reckless Home Lending, Courtesy of Fannie and Freddie

Thanks, John. You might want to have a look at Bruce Krasting's take as well. He draws similar conclusions. I would say that I agree that few will take the administration up on this offer. I think it merely a PR piece they can point to down the road to show they have been helping out homeowners too. If they can get anyone to do this, it just means fewer writedowns and that's the real purpose.

SoCalGal, you obviously haven't heard sarcasm that often or you would realize I referenced the fact that it's for refis only.


On Jul 03 11:57 AM John Lounsbury wrote:

I wrote an Instablog on this subject with some case studies before I saw your article. I will put as link in the blog piece to your article.