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Clear Capital Home Price Index shows Double Dip


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2011 May 5, 1:22am   8,179 views  16 comments

by terriDeaner   ➕follow (0)   💰tip   ignore  

http://www.calculatedriskblog.com/2011/05/clear-capital-home-price-index-shows.html

http://www.clearcapital.com/company/MarketReport.cfm?month=May&year=2011

We have finally arrived.

From Clear Capital:

This comparison leads to concern over home price declines through the rest of 2011. The trends of 2008 were quickly reversed with the introduction of stimulus measures. However, home prices today are already down nearly 25 percent since the 2008 period, creating increasing "home affordability", in addition to "gradually improving" employment measures. Unlike the 2008 period where the downward trend ended in the winter, we're now heading into the home buying seasons of spring and summer. Regardless, the housing market still faces many challenges that will only be solved through increased buying activity or a reduction in the distressed segment―neither of which is assured in 2011.[quotation marks added]

#housing

Comments 1 - 16 of 16        Search these comments

1   LAO   2011 May 5, 3:13am  

Looking pretty darn close to capitulation... I'd say very worst case scenario be a 25% drop from here in some markets... But if that happened we'd have a pretty hard BOUNCE off the bottom the following 2 years... (At a 25% drop from today... Rents almost everywhere would be HIGHER than owning).

Most likely if housing dropped another 25%... You'd see a similar scenario as when the DOW dropped to 6000.... Then buyers came out of the woodwork like mad!

If housing does recover I see the stock market crashing again though... We are going to be SEE SAWING back and forth between housing crash and stock market crash until things stabilize. There's no way the stock market should be approaching 14K on the DOW already... The Stock market is the new bubble right now... Even if PE ratios aren't terribly high.. They are pretty damn high for this environment of uncertainty.

When people cash out their stocks to buy houses en masse... The reverse will occur... and housing will starting gaining again. Albeit at a slower pace.

2   joshuatrio   2011 May 5, 3:45am  

Where's the spring bounce?

3   klarek   2011 May 5, 3:57am  

Is there any doubt at all that the bump, which created what some have falsely regarded as "the bottom", was almost entirely the result of the tax credit? Is anybody still in denial of this glaringly obvious phenomenon?

4   thomas.wong1986   2011 May 5, 6:36am  

klarek says

Is anybody still in denial of this glaringly obvious phenomenon?

Plenty!

6   LAO   2011 May 5, 10:37am  

This is starting to sound like March 2009 stock market sentiment all over again...

Everyone was saying sell all your stock.. DOW is heading to 3000.... in March 2009. If you did that you really f'd yourself.

AS they say.. BUY when there is "blood in the streets"... This second double dip in housing looks to be that "blood in the streets" moment!

7   klarek   2011 May 6, 1:13am  

There's a very strong argument for Phoenix having "overcorrected". Fortunately the rental parity makes it increasingly less flexible/vulnerable beyond a certain point since investors (such as Roberto) can absorb the inventory and see immediate cashflow-positive opportunities.

Places like Detroit and Las Vegas that have been economically decimated, I wouldn't say they've overcorrected. When the fundamentals (household income) take such a large, unrecoverable hit like that, prices actually ought to fall.

8   thomas.wong1986   2011 May 6, 4:57am  

klarek says

When the fundamentals (household income) take such a large, unrecoverable hit like that, prices actually ought to fall.

I dont think you will find incomes were that high to sustain these prices. See below. This has been going on for a very very long time.

Amid Talent War Apple, Google, Adobe Sued For Conspiring To “Fix” Employee Salaries

http://searchengineland.com/amid-talent-war-apple-google-adobe-sued-for-conspiring-to-fix-employee-salaries-76004

Last year, after an investigation, the US Department of Justice (DOJ) concluded that a number of tech companies, including Apple and Google, violated antitrust laws when they agreed not to poach and cold call each others’ employees. The DOJ obtained a settlement that “prevents [the companies] from entering into no solicitation agreements for employees” for five years.

The complaint alleges that executives from Lucas Film and Pixar (and later the other named companies) conspired to fix employee compensation at “artificially low levels”:

[Defendants] entered into at least three agreements to eliminate competition between them for skilled labor. First, each agreed no to cold call each others’ employees. Second, each agreed to notify the other company when making an offer to an employee of the other company, if that employee applied for a job notwithstanding the absence of cold calling. Third, each agreed that if either made an offer to such an employee of the other company neither company would counter offer above the initial offer. This third agreement was created with the intent and effect of eliminating “bidding wars”

9   klarek   2011 May 6, 6:02am  

thomas.wong1986 says

I dont think you will find incomes were that high to sustain these prices. See below. This has been going on for a very very long time.

Didn't mean to suggest that they were.

10   toothfairy   2011 May 6, 12:50pm  

so far its about in line with expectations Ive seen. 5% drop in first half followed by a 10% increase by 2012 we'll see how that pans out!

11   terriDeaner   2011 May 6, 3:47pm  

toothfairy says

so far its about in line with expectations Ive seen. 5% drop in first half followed by a 10% increase by 2012 we’ll see how that pans out!

So how about the second half of 2011? How about another 15% drop?

12   toothfairy   2011 May 6, 4:32pm  

terriDeaner says

toothfairy says

so far its about in line with expectations Ive seen. 5% drop in first half followed by a 10% increase by 2012 we’ll see how that pans out!

So how about the second half of 2011? How about another 15% drop?

well yeah I've seen some of the superbears calling for a 20%-30% drop from here. we'll see how that goes too!

13   terriDeaner   2011 May 6, 4:52pm  

toothfairy says

we’ll see how that goes too!

Agreed.

14   klarek   2011 May 9, 12:21am  

toothfairy says

so far its about in line with expectations Ive seen. 5% drop in first half followed by a 10% increase by 2012 we’ll see how that pans out!

All of that could happen in 2011. No reason to believe that a quick correction won't happen now that most of the stops have been pulled.

toothfairy says

yeah I’ve seen some of the superbears calling for a 20%-30% drop from here.

I can think of a few reasons that *could* happen (mostly due to large demographic shifts), but they're not anything I'd be willing to bank on at this point. Bottom line is that prices are still too high and have been too high for a long time. How anybody could have been fooled into thinking that the artificial bounce we saw had little or nothing to do with the tax credit still amazes me. It's like saying that the rain doesn't come from the clouds, or, more aptly that food doesn't turn into shit.

15   bubblesitter   2011 May 9, 12:46am  

klarek says

How anybody could have been fooled into thinking that the artificial bounce we saw had little or nothing to do with the tax credit still amazes me.

I agree but the fact is that there are millions of buyers who believe in their realtards - one of the reason why bleeding has been super slow.

16   tts   2011 May 9, 1:14am  

Several generations were raised on the whole home ownership=American Dream propaganda. That won't go away overnight or even in a few years. Housing will have to get beat down bad for quite a long time for old bad habits and perceptions to get broken and sink in with a new generation.

You also have to factor in that many people bet on the bubble to fund their retirements. Lots of them will flock towards any little glimmer of hope that suggests that they may actually not have to work until they're 70 and die poor. They're going to have to totally lose all hope in the possibility of that not happening and some never will if for no other reason than they find the idea of that happening unbearable.

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