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Feb. S&P Case-Shiller Home Price Index: 0.2%M/M vs. 0.0% prior. -3.5% Y/Y vs. -3.3%...

Feb. S&P Case-Shiller Home Price Index: 0.2%M/M vs. 0.0% prior. -3.5% Y/Y vs. -3.3% expected, -3.8% prior.
Comments (36)
  • bbro
    , contributor
    Comments (9834) | Send Message
     
    Housing is undervalued by 6%...
    24 Apr 2012, 09:11 AM Reply Like
  • mickmars
    , contributor
    Comments (1323) | Send Message
     
    Well then it will be undervalued by 7% next month....
    24 Apr 2012, 10:30 AM Reply Like
  • redwoodhouse
    , contributor
    Comments (8) | Send Message
     
    housing is a bit undervalued only when considering the very cheap interest rates which are not normal. When the fed is forced to normalize interest rates then this game will end. For most of the last 30 years inflation has been 3-4% and money markets used to be 5% which meant mortgages were 6-7%. A houses value is much lower at a 6-7% rate.
    24 Apr 2012, 11:12 AM Reply Like
  • Tack
    , contributor
    Comments (13552) | Send Message
     
    Nope. Won't happen. By that measure housing should have always declined in value as rates marched higher. Of course, exactly the opposite occurs.

     

    First of all, lots of sideline sitters get motivated, as they start to see those endless low rates disappear. Secondly, banks get more interested to make loans at better rates, so lending gets more flexible. Thirdly, rising rates almost always are a sign of improving economies and inflation, and that benefits home prices.

     

    The persistent thinking that becomes ingrained that home prices cannot and will not rise is simply the hangover effect of the recent past, but will not dictate the future. Already, some of the previously hardest-hit areas, like Florida are suddenly thriving, and inventories are low and rental prices have jumped above ownership costs. The future for housing will be positive.
    24 Apr 2012, 11:27 AM Reply Like
  • WallStreetDebunker
    , contributor
    Comments (2511) | Send Message
     
    "First of all, lots of sideline sitters get motivated, as they start to see those endless low rates disappear. "

     

    The theory about sideline sitters is like the notion that mom and pop will start investing in stocks when the market makes a comeback. (The stock market has risen nearly 100% in 3 years and retail investors are still exiting each month.)

     

    It's obvious that many of the people who are interested in buying houses are the same people who were real estate speculators ("investors") during the bubble years.

     

    Only a small part of Florida is thriving (due to the same types of speculators who inflated the prior bubble). Most of Florida is weak.

     

    "Inventories are low and rental prices have jumped above ownership costs."

     

    This is realtor propaganda. Look beyond the headline data. Nationally, inventories are high if you include the shadow inventory which will eventually be put on the market.
    24 Apr 2012, 12:25 PM Reply Like
  • Tack
    , contributor
    Comments (13552) | Send Message
     
    WSD:

     

    I live in Flroida.

     

    About Florida, I can simply say the speculator bargain market ended many months ago, and, now, there are many homes, both existing and new, attracting multiple bids. And, prices are rising.

     

    And, inventories are at very low levels. You can't purchase a "shadow" house, so one can claim any number of nonlisted homes one wishes, but they have no immediate inventory effect.

     

    I could post many more of these:

     

    http://bit.ly/K6khIQ

     

    http://sunsent.nl/Ia5DEb

     

    http://bit.ly/K6kjAq

     

    http://bit.ly/Ia5DEc

     

    If you want to write it all off as realtor deception, feel free. It doesn't change reality or the likely continued direction.
    24 Apr 2012, 12:40 PM Reply Like
  • WallStreetDebunker
    , contributor
    Comments (2511) | Send Message
     
    All links were to South Florida--speculator heaven.

     

    Did you read beyond the headlines?

     

    "Although sales declined statewide..."

     

    These little fluctuations in price (5%) are meaningless.
    24 Apr 2012, 12:59 PM Reply Like
  • Tack
    , contributor
    Comments (13552) | Send Message
     
    WSD:

     

    Prices are rising in Tampa, Orlando, Jacksonville, etc. Did I have to put a link for every city for you?

     

    The speculators, themselves, have been quoted as saying the depressed deals are over.

     

    Sales volumes have been down because inventories have shrunk to very low levels. What, you think that means the housing market is getting weaker?

     

    You just want to believe what you wish to believe, data notwithstanding. Go right ahead. Meanwhile, I'm happy to be making money with realty stocks and REITs.
    24 Apr 2012, 01:16 PM Reply Like
  • kwm3
    , contributor
    Comments (2453) | Send Message
     
    I see inventories bloated with lots of foreclosures and building, I also see demand being greatly reduced after this episode, which shattered the mantra that housing is safe and goes up in value. Moreover, in most areas pricing remains out of whack with income. I looked at a place I thought befitting of someone of my income, but the price was so inflated I'd be at the 47% leverage even after negotiating hard on price. Ten years ago this would've been at 28% (yes, I know how to check the deed)--and there's the rub, and the precise cause of this crisis/depressed economic activity. So, I believe prices need to normalize or else I sit out and grow my capital (rather than lose it) in other ways... and continue to enjoy no capital at risk in an apartment--I sold another home in 2005 because I saw this mania loud and clear.
    24 Apr 2012, 01:26 PM Reply Like
  • WallStreetDebunker
    , contributor
    Comments (2511) | Send Message
     
    Someone has to correct your repeated misinformed statements. I'm wondering if you ever read beyond headlines. In the following Case Shiller data released today, notice what the report says about Tampa, for instance:

     

    "“While there might be pieces of good news in this report, such as some improvement in many annual rates of return, February 2012 data confirm that, broadly-speaking, home prices continued to decline in the early months of the year,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “Nine MSAs -- Atlanta, Charlotte, Chicago, Cleveland, Las Vegas, New York, Portland, Seattle and Tampa -- and both Composites hit new post-crisis lows.
    24 Apr 2012, 01:55 PM Reply Like
  • WallStreetDebunker
    , contributor
    Comments (2511) | Send Message
     
    Also, the same Case Shiller report shows the Miami area rising less than 1% in Feb. You clearly are reading biased realtor propaganda. I'm using the unbiased Case Shiller data from the S&P website--not a blogger's opinion or the real estate infoadverts from a local newspaper.

     

    Improve the accuracy of your statements and I won't have to correct your false claims.
    24 Apr 2012, 02:04 PM Reply Like
  • neobliviscar
    , contributor
    Comments (163) | Send Message
     
    WSDebunker,

     

    Your bio. sounds like your mind is quite set and not open to debate on RE.
    We live over half the year in Florida and part of it in Manhattan. I'm born and partially raised many decades ago in that state, and I love to hate that flat place of beaches and sun and booze addled retirees aka "God's Waiting Room". Only fishing and diving are escape from geriatric congestion. Everything seems 20 years behind NYC.
    Yet it is an excellent state for our businesses. And I was caught off guard by the wicked bounce in the wealthier nicer parts. Total inventories cleared out. Tack is right in the micro, and unlike previous waves, the speculation is much less than before. Many of the carpetbagger speculators and local yocals got slammed into history. Now it seems to be frustrated babyboomers who thought they could wait and wait. Someone blinked, and the past winter had caravans of them suddenly scrambling. I felt it would cool with the spike in rates that has since evaporated a bit. Next season will tell the truth or lie of it.
    New York City on the other hand, propped up prices with properties going at .60cents on the dollar if you do it around the brokers. Brooklyn is swiss cheese and expenses keep rising. As much as I'd love to be here most of the year, I cannot see buying here. As a business owner and with current tax law being what it is, it makes sense to buy at these prices in nicer parts of Florida. I cannot make the math work for NYC places. Seems rigged here.
    Keep an open mind that Tack might be right in the Florida microcosm excluding some of the armpit areas.

     

    However, it does seem elsewhere people are still living on the fumes of 2005-2006.
    24 Apr 2012, 03:52 PM Reply Like
  • WallStreetDebunker
    , contributor
    Comments (2511) | Send Message
     
    Is there anything to debate with you? Your writing is like an endless stream-of-consciousness recording of a man talking to himself late at night after too many drinks.
    24 Apr 2012, 04:12 PM Reply Like
  • neobliviscar
    , contributor
    Comments (163) | Send Message
     
    Yep. Knew I'd regret writing you and that two piston brain.
    "Bless your heart" povero pazzi, and all that quaintness.

     

    Your debate was with Tack, and he is right.
    24 Apr 2012, 04:22 PM Reply Like
  • WallStreetDebunker
    , contributor
    Comments (2511) | Send Message
     
    Tack will feel better knowing that you are on his side. I regret criticizing your writing style. I should have more sympathy in case it turns out your writing is jumbled up as a result of eating beef from a California cow with Mad Cow disease.
    24 Apr 2012, 04:52 PM Reply Like
  • Tack
    , contributor
    Comments (13552) | Send Message
     
    WSD:

     

    I only hope you align your investment strategy with your mouth. That will be a joy to behold.
    24 Apr 2012, 05:02 PM Reply Like
  • neobliviscar
    , contributor
    Comments (163) | Send Message
     
    Hey now, I think I called you pazzi/pazzo/patsy first. What is with the copy cat routine?

     

    Fine, fine.... yes I am that younger, better educated, wealthy self made 1% dastardly Wall Street type you "debunk".

     

    WSD wrote: "Journalists are enablers for the misinformation campaign. I assume that most journalists, who are typically low-paid, own underwater homes and need a boost in real estate prices to have a shot of retiring before age 90."

     

    Lovely assumption. Brilliant tin-foil hat approach to investing.
    Who is calling whom crazy?
    25 Apr 2012, 12:32 AM Reply Like
  • dnpvd51
    , contributor
    Comments (2004) | Send Message
     
    It is a bad time to buy a house because of the Federal Government.

     

    The federal government is keeping rates too low artificially. This cannot happen forever so when rates start rising housing prices will start falling.

     

    Further the government is basically the housing market with Fannie and Freddie and the FHA backing all these loans. Renters and homebuyers are getting cheated by the Federal Government. Can this go on forever?

     

    If the Federal government backs out of the housing market like they should out of fairness and financial stability, the housing market will drop to whatever level it really should be at.

     

    Now if one buys a house one is not only buying the house but all the very expensive Federal welfare for homeowners.It is a bad time to buy a house because of the Federal Government. Massive Federal welfare payments to homeowners cannot continue forever or the dollar will plunge.

     

    And then we have the Federal Reserve buying junk mortgages and holding them. Are they going to hold this junk forever?
    24 Apr 2012, 11:46 AM Reply Like
  • Old Rick
    , contributor
    Comments (518) | Send Message
     
    Take a peek at ZH for the WHOLE story on Case-Schiller and new home sales.
    24 Apr 2012, 12:34 PM Reply Like
  • Poor Texan
    , contributor
    Comments (3531) | Send Message
     
    This market is very hard to figure and generalizations are always wrong. The market has been stuck for a couple of years resulting in deferred decisions by solvent homeowners on selling, buying, trading up, trading down or relocating. In our retiree area (~100 homes) we've finally had a little activity on the homes of two relocatees and a divorcee but there are at least a dozen that are waiting for their price. And some solvent homeowners are strengthening their position by refinancing. It's very much an individual situation market.
    24 Apr 2012, 02:15 PM Reply Like
  • SteveThompson
    , contributor
    Comments (33) | Send Message
     
    Here's a look at the number of new single family housing permits in the United States compared to historical levels:

     

    http://bit.ly/Iamqaa

     

    While some housing data releases may seem to indicate a levelling off of price declines, the number of permits indicates that the housing market is still a long way from bottoming.
    24 Apr 2012, 02:23 PM Reply Like
  • WallStreetDebunker
    , contributor
    Comments (2511) | Send Message
     
    Realtors, speculators, and Wall Street shills desperately point to each piece of real estate data that yields a positive number, no matter how trivial and no matter how small the improvement is compared with a normalized pre-bubble housing market.

     

    It's similar to the way Apple fan-boys and Wall Street pumpers used to get lathered into a frenzy each time the late Steve Jobs so much as farted.

     

    I realized how insane the Apple mania was when I saw a headline article in a major news outlet about the fact that Apple was offering a new color for one of its popular gadgets.

     

    Realtors and wall street are just as ridiculous when they announce the latest microscopic thread of information that supports their biased desired to see improvement in the housing situation.

     

    Journalists are enablers for the misinformation campaign. I assume that most journalists, who are typically low-paid, own underwater homes and need a boost in real estate prices to have a shot of retiring before age 90.
    24 Apr 2012, 02:32 PM Reply Like
  • greenmachine33
    , contributor
    Comments (43) | Send Message
     
    Why do I often find flat out wrong data on this website?

     

    The headline above is wrong. From above "0.2%M/M vs. 0.0% prior. -3.5% Y/Y vs. -3.3% expected, -3.8% prior." I don't know where they got that. I checked the actual Case-Shiller PDF at standardandpoors.com.

     

    It was -0.8% M/M Feb 12 vs -1.0% M/M Jan 12. -3.5% Y/Y vs -3.9% Y/Y in the prior month. This is for 20-cities composite SA. The NSA M/M was worse at -1.0%. I also checked the 10-city composite and it was the same as 20-cities, except Y/Y at -3.6%. Expected numbers the source was not named so you can make up anything.

     

    As far as I can see, the only value in the seekingalpha headline that matches anything in the actual Case-Shiller report is the -3.5% Y/Y 20 cities. A simple google search of other headlines seems to match my values.
    24 Apr 2012, 04:36 PM Reply Like
  • WallStreetDebunker
    , contributor
    Comments (2511) | Send Message
     
    For several months now, home price headlines have been consistently misleading on nearly all financial media websites. I assume this is a case of hope triumphing over experience.

     

    But who cares about that? Apple beat quarterly estimates. All bow down to the mighty god, Apple.
    24 Apr 2012, 04:56 PM Reply Like
  • greenmachine33
    , contributor
    Comments (43) | Send Message
     
    WSD: Do you know the source of these 3 wrong numbers? I tried to search around for articles with the same combination of values. I did not see any. The one possibility is they confused estimate and actual data.

     

    This data is flat out incorrect, not just misleading, as it does not quote the source correctly.

     

    As for misleading, I have noticed that over the last 5 years a lot of media people confuse or isolate Y/Y, M/M, NSA vs SA and the absolute value of the index when they give their "interpretation". But S&P is kind enough to put all the data in one PDF so I have got into the habit of just reading the PDF myself.
    24 Apr 2012, 05:59 PM Reply Like
  • WallStreetDebunker
    , contributor
    Comments (2511) | Send Message
     
    GreenM,

     

    I don't know the source of the numbers.

     

    You probably have noticed that long term charts for real home prices have a surprising amount of variation between the three indices (10-city, 20-city, national). I agree that journalists are being very sloppy in their selection and presentation of data to support the angle of their articles. I've even seen some professional journalists refer to incorrect charts on blog websites.

     

    As a side note, journalists and analysts have repeatedly ignored long-term historical data when they refer to the HMI index provided by the NAHB. The NAHB provides honest data, but journalists apparently never open the Excel files on the NAHB website. For example, the recent HMI numbers paint a bleak picture of current sentiment among homebuilders, yet journalists were celebrating recent increases in the HMI number as if homebuilders are breaking out champagne bottles. Recent HMI numbers are roughly as low as the lowest five or six monthly scores in the pre-bubble years of 1988-2005.
    24 Apr 2012, 06:20 PM Reply Like
  • greenmachine33
    , contributor
    Comments (43) | Send Message
     
    I went to hahb.org and downloaded the housing permits spreadsheet. It does show increases that were talked about for Jan and Feb Y/Y, but I could not easily see the readings for the long term. I saw the release on the HMI confidence, but not the full history.

     

    I usually mainly follow HOUST and PERMIT1 on FRED, occasionally checking other sources, and the numbers there seem approximately in-line with NAHB. I like the organization of the site, where you can easily see the long historical context as well as the last several months print, SA and NSA, and also you can click and see the raw data for everything.

     

    The key thing that jumps out when you look at the full historical data is that it is pointless getting worked up over whether there are 400K or 450K starts or permits when the peak was 2M, and the long run average was around 1M. Also you really need to look at 5+ units and 1-4 units separately. 1-4 unit data is mixed since the recession. I found it interesting to note that although 5+ unit permits had the highest NSA monthly print since the recession, the level (23K in March) is still much lower than the typical number of about 30K from mid 1990s until 2008. Despite the significant increase in the number of total renters since the recession, we may just be reverting back to the mean. It makes sense we would not build rentals above trend since if those people moved out during that period, they can just move back in. Housing is a pretty durable good.

     

    I will not been suckered into an argument whether you should believe anything on a Fed website - try me :)
    24 Apr 2012, 08:54 PM Reply Like
  • WallStreetDebunker
    , contributor
    Comments (2511) | Send Message
     
    "It is pointless getting worked up over whether there are 400K or 450K starts or permits when the peak was 2M, and the long run average was around 1M."

     

    That's the issue in a nutshell. And it makes sense to me that rentals will likely revert to the mean. Multi-family housing might have a 10-year or 20-year growth cycle. Plenty of baby boomers might move into multi-family rentals to simplify their lives and to economize, especially as their retirement funding comes up short due to ongoing asset impairment (stocks, real estate, and soon enough---bonds.)

     

    To see the history of HMI scores going back to 1985, go to the link below and click "Table 2. NAHB/Wells Fargo National HMI - History"

     

    http://bit.ly/In3osJ

     

    (To read the document, your computer needs to have a program that can read Excel documents)
    25 Apr 2012, 01:40 AM Reply Like
  • greenmachine33
    , contributor
    Comments (43) | Send Message
     
    WSD:

     

    I looked at HMI history - interesting chart. After 5 years of all time lows (since 1985) we just returned to the 1990 low (the all time low prior to 2008). It seems to match the Fed charts general trend if not the absolute value.

     

    So your theory is based on baby-boomers living within their means? They haven't done it all their lives, why start now! :-) Jokes aside, the number of renters has already reverted to the pre-bubble levels. We have some way to go to get back to 1960 home ownership rate of 62%. Maybe with the demographics of the number of over-65 increasing from 12% to 20% of population by 2029 it can go below that.

     

    I had heard about a "boom" in rentals but until I dug into the latest multifamily (5 or more units) numbers I found that the best month of this "boom" (March 2012) is still about 30% below just a typical average month in the 90s for construction activity by all measures.

     

    I agree there should be a boom in the number of renters, but I do not know if that necessarily will translate into rental construction. They could just move into vacant units. There is also a lot of supply coming onto the market as foreclosures work their way through the system. It is hard to know how it all plays out.
    25 Apr 2012, 12:05 PM Reply Like
  • WallStreetDebunker
    , contributor
    Comments (2511) | Send Message
     
    Green:
    Property owner/managers have been raising rents above inflation rates. With this going on for a few years now, the bankers/lenders are more willing to open loans to developers. The cap rates can justify the risk of lending.

     

    Perhaps the vacant single family homes could absorb most of the future renters, but as long as rents and property values of apartments keep rising, banks will write checks to (solvent) apartment developers.
    25 Apr 2012, 12:22 PM Reply Like
  • greenmachine33
    , contributor
    Comments (43) | Send Message
     
    WSD:

     

    I know someone that just closed on purchasing a rental apartment building with a loan from .... Fannie Mae. That suprised me, since apartment buildings used to be considered commercial, and Fannie Mae was allegedly purported to promote home-ownership not rental. No condos here, just pure rental.

     

    No argument that checks will get written, it is just interesting to note that the level of construction is still significantly below the level in the 90s when the macro trend was in the other direction (increasing home-ownership rate every year)
    25 Apr 2012, 12:50 PM Reply Like
  • WallStreetDebunker
    , contributor
    Comments (2511) | Send Message
     
    There are (only) two large development projects near me that recently have begun the building process. One is a single-family home project and the other is a large apartment complex. Both are being done by private builders. (This gives small anecdotal evidence that private builders have not been shut out of the industry).

     

    The apartment building will almost certainly be a profitable project (the rental market is very tight where I live, and rents are rising fast). I'll be surprised if the single-family project can sell-out the homes within two years. Probably less than 20% of the local residents can get a mortgage for these homes.
    25 Apr 2012, 01:36 PM Reply Like
  • greenmachine33
    , contributor
    Comments (43) | Send Message
     
    WSD:

     

    I said nothing about private builders. I said this is public financing (Fannie Mae). This is a private buyer of an existing building for private profit and gain with public financing. They are contributing some equity of course, but the interest rate is well below market rates for commercial loans.

     

    I would be very surprised if Fannie Mae gives construction loans to builders - but then I was very surprised they gave purchase loans on rental buildings as well....
    25 Apr 2012, 02:25 PM Reply Like
  • dnpvd51
    , contributor
    Comments (2004) | Send Message
     
    Here is a link:

     

    http://bit.ly/I9QcNp

     

    I think this is outrageous. Fannie and Freddie need to closed and shut down forever.
    25 Apr 2012, 05:42 PM Reply Like
  • Tack
    , contributor
    Comments (13552) | Send Message
     
    There are two main impediments to more rapid growth in home sales, both existing and new:

     

    1) Caution and lackluster interest on the part of banks to make multi-year loan commitments, especially fixed-rate loans, at historically-low rates, which are seen as artificial and unlikely to persist.

     

    2) Not often discussed, but just as if not more critical, is the alteration in the law that exposed property appraisers to direct lawsuits from purchasers. This supposed "reform" has had a chilling effect on appraisal values for the simple reason that appraisers are paid fixed fees and have no incentive to take any risks of appraisals exceeding, or even meeting, actual market values. Therefore, what's been occurring on a routine basis is deals, where buyers, sellers and even the bank were in accord, are failing appraisals, as the appraisers disproportionately discount the property values, as a CYA measure. This phenomenon is retarding the sales growth of executed closings, even where demand is existent. It is also having an artificial dampening effect on market values.

     

    Of the above, the first will be addressed, if and when the improving economy forces rates higher. It's unclear how the negative effects of the second will be ameliorated or whether they will afford a more permanent burden on closed sales and prices, thereby dampening growth rates.
    25 Apr 2012, 12:15 PM Reply Like
  • old hickory
    , contributor
    Comments (10) | Send Message
     
    Housing prices will accelerate only when:
    1. Incomes increase and the new/old down payments (20%) can be met
    2. Lending loosens up and we get back to the old/new stated income lending standards .

     

    Otherwise we will have bidding war bubbles from area to area and from time to time. Remeber bidding wars have not gone away during 2009 and 2010 depending on tax incentives and price points. If a property is priced low enough it will receive multiple offers.
    That being said most houses being sold now are well under replacement costs. So either replacement cost need to be lowered or prices must rise to spur any kind of new home building recovery.
    That means a home builder must purchase land or lots at reduced prices. That has occurred in many areas. The second part of that equation is that government fees must also be reduced to make large scale housing construction economically feasible again and that has not been nor will be forthcoming.
    What is misunderstood is that as house prices skyrocketed during the boom years so did the fees charged by cities and counties. Land, labor, construction materials all adjusted, not so the fees or requirements by the various jurisdictions.
    29 Apr 2012, 03:35 AM Reply Like
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