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Here is what Calculated had to say today:

Case-Shiller Headlines

The important points are:
1) this is a three month average of May, June, and July. Seasonally this is the strongest time of the year for house prices.
2) sales collapsed in July, so the next report (for June, July and August) will probably show falling prices.

Date of sale in this context means date of closing the sale, not date of contract.

Case-Shiller is based on date of CLOSING the sale, which means that tax-credit transactions are distorting the market several months after the credit officially expired.

The tax credit is based on date of contract agreement, with some leniency as to when the sale closes.

What mthom said.

The delay between contract and closing, plus the 3-month moving average means that C-S will stay up until September's numbers are released on Oct 28, although sales already tanked in July.

This is Calculated Risk's prediction, and I think he is correct.

I'm betting we're more 1994 than 1995. A July decline would have been catastrophic -- an August decline less so... but still not good.

Easy mthom - this thread may make the Patrick.net book of world records.

This may be the first time that the Case-Shiller index was discussed without any name calling, or lashing out !!!!

This is a pleasant debate : )

SF 11.2% increase. Whew! Can someone back this up by some numbers coming from the field?

It's worth noting that the top tier ($621,684) in the SF Bay Area index continued to drop (again) this month from 149.1 to 148.5. It peaked in May at 150.07.

EBGuy says

It’s worth noting that the top tier ($621,684) in the SF Bay Area index continued to drop (again) this month from 149.1 to 148.5. It peaked in May at 150.07.

I was just going to point that out. Seasonally adjusted is actually more dramatic, since these are normally the months when you get a bit of a boost in closing prices. Down 2.6% since the May number (149.4 to 145.55).

I don't want to extrapolate too much on the trend since it's only a few months old, but that's an 8.5% annualized rate of fall.

Low end seems to be holding up well.

thanks

EBGuy says

Low end seems to be holding up well.

It makes sense due to tight restrictions on loan for higher amount.

To add to your points Bap33, if the now under $200k subprime disasters (which were selling for $650k-$850k in places like East Palo Alto and Antioch) have been sold off and are reducing in turnover, then logically, average sold home prices will go up, even if sales of more expensive homes stay flat or even go down a little. I believe C-S is supposed to track same-house sales over time versus aggregated regional sales because the former is more reflective of pricing moves, and the latter could be distorted by shifting inventory concentrations.

At the higher end I see plenty of homes in the area reducing prices and sitting on the market. For example, one near us was listed around that April 2010 timeframe first at $1.65M, then reduced eventually to $1.5M before closing last week at $1.42M. So in this case who cares about whether that was a rising asking price... the thing still didn't sell until 14% below asking. And that price is also lower relative to its peers' sales last year.

So glad I don't have pets! :-)

Methinks AF watched Book of Eli and The Road in one sitting.

APOCALYPSEFUCK says

We are not even half way to
TERMINAL VELOCITY!
Brace for 1970s housing prices and catastrophic waves of arson and homeowner suicides as howling despair sets in and buyers realize they can’t flip for 2x in 12 months and the last-suckers-left-holding-the-bag sit watching the bank seizure crews kicking down the front door and raping their spouses and pets.

NA! Chill awhile! There was a world before the bubble.

Purely anecdotal observations follows: I really haven’t even been looking much in the last year in my area (Southern Sonoma County CA), as prices have been fairly sticky. The other day I went to realtor.com to see what was on the MLS. Fair amount of houses noted as foreclosures (this must now be a sales gimmick) but more interesting many many price reduced notices (also a sales gimmick). While a price reduced notice is clearly a type of advertisement it also opens the door to bids below asking and shows the weakness of the market. This market certainly does not seem to be rising in price and is still over priced IMO.

The low end is done crashing, the middle is halfway down, the top has just begun.

What concerns me now is those poor people who are putting down $200k on $600k properties (that are overpriced by $200k) thinking it's ok, best they'll ever do, maybe they'll make money on appreciation. Well actually, it doesn't concern me that much. ;)

pkowen says

What concerns me now is those poor people who are putting down $200k

200K cash down? Those people aren't poor. Or at least they weren't when they put down the 200K

I must have a sick since of humor because I find AF's posts hilarious.

Poor people put zero or less than that down (105% loans, and such). That was how ridiculous this all got.

APOCALYPSEFUCK says

We are not even half way to
TERMINAL VELOCITY!
Brace for 1970s housing prices and catastrophic waves of arson and homeowner suicides as howling despair sets in and buyers realize they can’t flip for 2x in 12 months and the last-suckers-left-holding-the-bag sit watching the bank seizure crews kicking down the front door and raping their spouses and pets.
It’s gonna get really deeply truly apocalyptic out there with commercial RE crashing; ALT-A resets kicking in; Section 8 program reductions due to budget reductions (speculators should at least be able to eat their S8 tenants) and continuing meltdown of an economy that has no jobs left that it can’t or hasn’t already shipped to China.
Plant potatoes. Teach kids and spouse to shoot, at close range and without remorse and full in the knowledge that cannibal anarchy means choosing who gets to be dinner - them or the starving psychopath climbing in through the kitchen window.

If I had a sister, I'd want her to marry you so we could sit and visit at Christmas and Thanksgiving. I love you man!

APOCALYPSEFUCK says

We are not even half way to
TERMINAL VELOCITY!
Brace for 1970s housing prices and catastrophic waves of arson and homeowner suicides as howling despair sets in and buyers realize they can’t flip for 2x in 12 months and the last-suckers-left-holding-the-bag sit watching the bank seizure crews kicking down the front door and raping their spouses and pets.
It’s gonna get really deeply truly apocalyptic out there with commercial RE crashing; ALT-A resets kicking in; Section 8 program reductions due to budget reductions (speculators should at least be able to eat their S8 tenants) and continuing meltdown of an economy that has no jobs left that it can’t or hasn’t already shipped to China.
Plant potatoes. Teach kids and spouse to shoot, at close range and without remorse and full in the knowledge that cannibal anarchy means choosing who gets to be dinner - them or the starving psychopath climbing in through the kitchen window.

Stick around here. I find your comments very amusing. :)

San Francisco, Heading down ? Over all index is heading down as well.

SA = Seasonally adjusted

July/June Change
NSA SA
0.5% -0.5%

May/June Change
NSA SA
0.3% -0.4%

PRICES ARE GOING DOWN

The Case-Shiller numbers always lag. In a couple months the numbers will show substantial declines. If you go to Zilliow and others and take a look at how many real estate agents are reporting price declines vs. increases, it's obvious. Over 85% of houses either had prices lowered or the selling price was below asking price in the last couple months. And there were very very few sales, all time record low.

The market is headed towards the cliff. The only thing moving at all is low cost houses, typically below

Yet again.

1314.90 and 22.04 for ag!

Two words...gor-geous!

b8c0d50b says

PRICES ARE GOING DOWN
look at how many real estate agents are reporting

I'd believe the data but not any words coming out of realtors mouth anyday.

Parabolic?

I heard Shiller on the radio last night on the way home from work (AM 910, Bay Area, around 6pm) and he predicted continued falling prices.

@PolishKnight.

I went to openhouses last sunday, I saw whole lot of delusion there. This townhouse was listed at 595K, while another townhouse next to it sold at 460K in a month ago. I always ask the realtor why owner is selling it, and this case, realtor told me that he already bought bigger house and that's why he is so motivated to sell because he is paying two mortgages. Yeah, right, good luck with that price. I went to 3 more townhouses in the area, and the answers were kinda the same. They already moved or about to move to bigger house. Then I saw a moving truck and workers taking things out of another townhouse. This townhouse is not even listed, yet still they're moving out.

Homes selling fast there when the price is right. But those nice townhomes are sitting there for 100+ days, and I knew couple of them sitting there for 2 years on and off the MLS listing. Of course, people living in that area are doing quite well in general, and they can stick with kool-aid price though, some of them are getting desperated. I can say there's lots of potential buyers waiting in sideline, but not much suckers.

While we don't care what happened in California or Florida, but when we recall situations earlier this year, there's no homes for sale in snowy winter, then homes showed up in the market in spring like mushroom popping after rain, and lots of them suddenly disappeared in May. Not much new listings for couple monthes till Aug, then little more homes to the market in Sep w/ higher price tag. CS index in July went up, of course. It should be at least in this area, since it tracks the sales price. For sales volume, I don't think so. Last summer was not hot at all. NoVA alway is special. no recession ever happened, ehh... mabye recession for couple monthes, people still are sticking with 2007 price and starbucks are crowded than ever. But you know what? somehow, I feel like the time is comming soon in the area. So, keep your finger crossed. :P

This shouldn't be hard, Palin & Co. have identified that White Boomers have suddenly decided to become energized about something other than lawn care. They have money and savings that can be raided, so it will be. They are irrational and illogical and shit-scared about nearly everything, which plays right into her hands. All you need is the right sound-bites and watch the checks roll in.

Is it me or does this conversation smack of splitting hairs? Not even sure what the argument is about anymore? So we all agree that house prices continue to fall in some or most areas, we're just not agreeing how much, or who's graph is correct.

Who here really believes we're over the worst and it's pay-day again... take one step forward.

Side note: I just got back from Provence where I put an offer on a home for $275K. Out the door cash. The exchange rate is working me $1.36 to the €. Yet still the house is a deal compared to what I get here in CA. I can rent it out as a holiday home and make more than I'm getting in a US bank. Not to mention I'm getting paid in Euros. Paris is 2 hrs away on the TGV. Marseilles 1 hour by car. Cote d'Azur is 2.5 hours away on the motorway.

I know it's apples vs oranges, but seriously... what the fuck we fighting over? Overpriced, crappy cardboard boxes burning in the desert sun.

If it truly is a global economy... I just threw down an alternative.

junkmail says

Side note: I just got back from Provence where I put an offer on a home for $275K.

C'est génial! Avec un petit porche au soleil , et des tournesols ...

It's simple - interest rates are far too low. When a government shows that it does not value its own currency, there is nothing "bubbleicious" about a move towards precious metals. We've seen trillions of dollars borrowed and printed in the name of bailouts and handouts with near-constant reminders that the Fed will attempt even more of said to ameliorate today's pathetic economic situation.

Question for you: Where do you think the gold price would've gone had Volker not increased interest rates to 21%+?

ANOTHER question for you: When do you think Bernanke/the Fed will be able to raise rates to even a paltry 5-6%? HINT: Once you go ZIRP it's EXTREMELY difficult to go back up without imploding the entire system.

Doesn't all of this discussion of the "market is up" have to be in the context of what market you're referring to? For example, the sub-$200k crappy homes in certain slummy parts of the SF Bay Area are as expensive as some nicer homes in Nebraska. Are they the same market? Likewise, the $1.5-2M market in, say, Palo Alto appeals to a different set of buyers and goals.

If you're just thinking about it just from an investing standpoint, you can't buy and rent those Palo Alto houses at current market rates for anywhere near break-even cash flow, while perhaps you can for the $200k homes.

So these big national numbers seem so meaningless. What is an "average" house?

I say again - Shiller was on the radio last night saying prices were still falling and that he would not buy, absolutely nothing about being at a bottom.

FalconMaster says

HOUSING HAS NOT BOTTOMED!

Oh, wait a second. If you say it in all caps with an exclamation point after it, then it must be true.

Consider me convinced.

Look, we all know there's a lot of money in San Fran, Los Angeles, and San Diego..... Not everyone is going broke.... In fact, the wealth divide is just getting even LARGER in these cities, as it is in the united states in general.

The ghettos are becoming more ghetto... and the top "fortress" areas are thriving, but getting smaller. Naturally as the boundaries of fortress areas erode and the ghettos expand real estate values will go up in the fortress areas and down in the borderline areas. I'm seeing this first hand in Los Angeles county.

I'm waiting to buy partly because I can only afford to buy in the "border" areas of fortresses that are ERODING quickly.. So why on earth would I lock myself in a 30-year mortgage in a place that in 10-15 years could be a GHETTO!

Renting is the only sensible option for me personally at the moment. Is anyone else out there scared to commit to a mortgage for fear of school districts getting worse ect. Personally I like the idea of renting, possibly even until my wife and I have kids and they are ready to go to elementary school.... With impending budget cuts in CA and economic uncertainty in general.. a month to month lease is much less scary than realizing in 10 years you bought into a ghetto in the making.

thunderlips11 says

I think the new numbers are going to be real bad. Whether it’s coincidence or if they have other proprietary means of checking information, banks are suddenly moving to “pause” their ongoing foreclosure proceedings:
http://patrick.net/?p=541362

Couldn't one interpret banks "pausing" foreclosures many ways?

Spin 1 - prices are going higher so banks are waiting to foreclose to sell the houses next spring when prices are higher.

Spin 2 - few people are buying so banks aren't bothering to foreclose since they can't sell them.

Depending on the situation in Spin 2, if banks know prices are going to completely plunge, shouldn't they be trying to unload now and get 80 cents on the dollar instead of 50 cents? Or do they expect more government help?

Los Angeles Renter says

Renting is the only sensible option for me personally at the moment. Is anyone else out there scared to commit to a mortgage for fear of school districts getting worse ect. Personally I like the idea of renting, possibly even until my wife and I have kids and they are ready to go to elementary school…. With impending budget cuts in CA and economic uncertainty in general.. a month to month lease is much less scary than realizing in 10 years you bought into a ghetto in the making.

That's EXACTLY what we're doing... and saving several thousand dollars every single month along the way! Renting a nice big house in a non-ghetto area for half the cost of buying it (and with rent fixed for three years). And that's savings versus the real, fully-loaded cost including property taxes, insurance and maintenance, minus any potential tax deductions. Oh, and no capital or major maintenance risks at all. :-)

It's a great strategy right now, which will set you up for 2013 or so with a bigger bank account to boot. And besides, if interest rates do go up, which should lower capital costs proportionally, you can use all those savings to pay down the (smaller) mortgage and lessen the interest hit. OR, if the duck is right and property goes up over the next few years, I calculate the rental savings will roughly offset the higher future capital costs assuming even a 5% annual price inflation (as if). So with no near term capital or maintenance risks, it sure seems win-win.

"More modifications have become permanent and no longer counted as delinquent, and Fannie Mae and Freddie Mac are foreclosing again (they have a record number of REOs) - so there has been a decline in the delinquency rate."

This is nothing but FCs and mods eating through the weak and the dead.

From the graph they'll have a full plate for a very long time still.

From the source data:

The total mortgage portfolio decreased at an annualized rate of 5.2% in August.
Total number of loan modifications 114,568 for the eight months ended August 31, 2010

This is not evidence of a recovery and has nothing to do with affordability.