On the basis of a measly 0.1% decline in the Case-Shiller 20-City Home Price Index, Bloomberg Econoday concludes speculation isn’t a risk.
Why do I read keep reading Econoday? Entertainment value.
Add Case-Shiller to the list of home-price data that are slipping. The 20-city adjusted index fell 0.1 percent in data for June for the third straight negative score. Year-on-year appreciation also continues to slip, down 2 tenths to 5.1 percent for the slowest rate since August last year. This rate peaked in January at 5.7 percent and, though still respectable, has been sliding since.
Nine of the 20 cities show declines in the latest month with weakness centered in the Midwest and Northeast where Chicago is down on the month and up only 3.3 percent year-on-year with New York also down on the month and up only 2.1 percent on the year. Portland, at 12.6 percent on the year, and Seattle at 11.0 percent are stretching their lead over others in the West with California cities slowing to the mid-single digits.
The slowing has its positive side for California where prior gains were raising talk of a possible bubble. But over speculation doesn’t seem to be a risk right now as prices for existing homes ease.
Case-Shiller City Indexes
Case-Shiller 20-City Price Changes
I’m sure glad to discover there’s no speculation and no bubble in California.
Mike “Mish” Shedlock
Hard to believe crappy non-growing Illinois would have any increase in property values:
Tony Bennett said:
“I’m sure glad to discover there’s no speculation and no bubble in California.”
In 2006, when I thought things beyond insane and only matter of time before they blew up, I asked two RE agents (different markets and each with 20+ years in the business) their thoughts.
Both more or less said the same thing – market will plateau for a year or two … and then onward and upward … BUY.
Tony Bennett said:
5 of the 6 metro areas are in CS-20 …. somehow, I don’t think this will help price index …
WASHINGTON—The Financial Crimes Enforcement Network (FinCEN) today announced Geographic Targeting Orders (GTO) that will temporarily require U.S. title insurance companies to identify the natural persons behind shell companies used to pay “all cash” for high-end residential real estate in six major metropolitan areas. FinCEN remains concerned that all-cash purchases (i.e., those without bank financing) may be conducted by individuals attempting to hide their assets and identity by purchasing residential properties through limited liability companies or other opaque structures.
I still think the Fed constantly talking about interest rates but never raising them is going to cause total mayhem in the debt markets. “Forward guidance” has already bankrupted Detroit and Puerto Rico so i fail to see how that “number” doesnt have a spectacular blowout in the USA proper at some point. Prices keep collapsing…hardly bullish for the economy going into the election. I still strongly believe the stock market could jump 5000 points in a single day as well….
I would less describe it as a bubble and more describe it as stupidity. However it appears that market is slowing here which is probably more to do with the seasonal shift to the fall rather than anything else. No one but Tech CEO’s can afford anything here unless its in Oakland.
Since CS is a lagging index so I suspect more reality in the upcoming months
Singapore (AFP) – A US software firm which chose Singapore for the world’s first public trial of driverless taxis hopes to be operating in 10 Asian and US cities by 2020, an executive said Monday.
Brian E Considine (@e_considine) said:
You can see the big picture here :
As a nation we are roughly where we were with home prices where we were in the late 80’s and roughly within the band where prices have been moving around since 1955. 2007 stands clearly out as a bubble but where’s the evidence for a bubble now?
Brian the problem is that your “big picture” is a smaller picture, in that it is 4 years out of date and stops just short of the latest bubble.
Brian E Considine (@e_considine) said:
Fair point, missed that in the ‘big picture’. Houses produce rent and if interest rates are low then home prices have to be higher, otherwise just buy a cheap house and rent it out for more than you can earn in interest even after adjusting for risk.
Are You Missing the Real Estate Boom?: The Boom Will Not Bust and Why Property Values Will Continue to Climb Through the End of the Decade
1st [and last] edition (February 22, 2005)
About the Author – DAVID LEREAH, senior vice president and chief economist of the National Association of Realtors… [enough said]
“An important book, whether you agree with the author (as I do) that housing will remain an excellent investment or are convinced that home prices are poised for a plunge, David Lereah lays out a compelling vision of housing as a continuing positive investment—and how you can profit from real estate if you already own the home you live in, are looking to move from rental housing to an owner-occupied home, or want to use real estate as an investment.” —DAVID BERSON, CHIEF ECONOMIST, FANNIE MAE [enough said]
Perhaps both Davids are now working for the Fed?
One of the Amazon reviews:
Customers who bought this item also bought…
Your Yugo Will Run Forever and How to Set the Land-Speed Record With It.
HI Mish, I shared your article with a realtor friend of mine and he responded with this article below. Could you please comment.
“ ARTICLE IN SUNDAY PAPER: According to reports out of Washington Americans stepped up their purchases of new home in July to the fastest pace in nearly nine years. Seasonably adjusted rate of 654,000 units annually is the strongest since Oct of 2007. Demand has eclipsed the the pace of construction leaving just a 4.3 month supply of new homes available on the market down from 5.2 last year at this time. Strong job market and low interest rates are bringing record numbers of buyers in search of home but the number of homes for sale is low. Existing home sales reached a seasonally adjusted annual rate of 5.57 million in June, the BEST performance since early 2007. Construction companies have added 215,000 jobs in the past 12 months., while sales have risen 3.5 % at building material stores and 4.3% at furnishing stores according to the government. So far this year, new home sales have climbed 12.4 % to 352,000. Optimism abounds for many builders per the National Association of Home Builders with builder sentiment reaching 60 points. readings above 50 indicate more builders view sales conditions as good than poor.”
I don’t dispute any of that
Is the optimism warranted?
You would need to be Realtor to be optimistic. Since you are not a Realtor you are realistic and ethical.
This is an echo bubble. Price increases are Central Bank low rates / money printing induced. volume is nowhere near all-time highs, and the percentage of first time home buyers has not returned to levels prior to the year 2000. Demographics of indebted millennials and downsizing Boomers are starving the home demand pipeline.