The latest S&P/Case-Shiller home price index figures were just released. On a month-over-month basis, prices were up 1.2% in 20 top metropolitan areas in August. That marked the fourth consecutive monthly gain. On a year-over-year basis, home prices were down 11.3%. That was better than the 11.9% decline economists were expecting and an improvement from the 13.3% drop in July. All 20 cities are still showing YOY declines, but the rate of depreciation is moderating. The best market? Dallas at -1.2%. The worst? Las Vegas at -29.9%.
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- April S&P/Case-Shiller Index: Down 18.1% The April S&P/Case-Shiller figures were released this morning. They showed home prices in 20 top metropolitan areas down 18.1% from...
- S&P/Case-Shiller: Home prices down 18.7% YOY in March The latest S&P/Case-Shiller figures just hit the tape, and they continue to show home prices heading south. The 20-city index...
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{ 5 comments… read them below or add one }
I wish there were (an easy) way to discount the effects of the First Home Buyer tax credits. Would the home prices still be up (ever so slightly as they are)?
Mike,
Pertaining to “Your Falling Housing Update” one very important issue was not mentioned. What happens when the Fed stops buying MBS from the banks as his 1.2+ trillion is fully exhausted in the first quarter of 2010. When you have nobody but the Fed purchasing this paper they have actually done what gov’t does, manipulate the market and distort the free market. Well, the free market will rear it’s ugly head in the first and second quarters as interest rates start to rise quite rapidly as the free market will demand higher interest rates. PIMCO sold back 80 billion they bought because they realized it was not a prudent risk at the cost. The whole R.E market will come to halt as rates start rising into the 6’s and 7’s. Then we will see a new gov’t program to interrupt the free market. My take, the 30 interest rate will rise to 8-10% in the next 3 years so I would wait till the rates rise as housing prices take another leg down.
Mike Larson Reply:
October 30th, 2009 at 9:53 AM
That analysis assumes the Fed will stop its support of housing and mortgages. But has the Fed EVER shown the predeliction to stop bailing the markets out once it gets involved? The answer is no. Look how many times the “temporary” TALF, TAF, etc. programs were extended. Or how about the first-time home buyer tax credit? It was supposed to end on November 30, but in an effort to buy votes and kowtow to the real estate lobby, Congress is extending it through the first half of 2010.
At SOME POINT, the market will FORCE the Fed and Congress to get a grip. The mechanism will likely be a sharp plunge in the dollar (vs. the drip-drip-drip selling we’re seeing now) or a sharp plunge in bonds as the vigilantes finally stand up to the Fed’s debt monetization. But it’s impossible to know exactly when that will happen.
Mike,
I agree with your points, I just do not see how the Fed can continue on this path with out some type of serious market reaction on the negative side. When it does arrive look out below. I do not see real estate attractive at this point. Again, I am personally waiting for when the 30 year rises between 8-10% and evaluate the situation at that point. Higher rates equals lower values.
“At SOME POINT, the market will FORCE the Fed and Congress to get a grip. The mechanism will likely be a sharp plunge in the dollar (vs. the drip-drip-drip selling we’re seeing now) or a sharp plunge in bonds as the vigilantes finally stand up to the Fed’s debt monetization. But it’s impossible to know exactly when that will happen.”
That the predicament we are in, as investors. Keep the powder dry at very low or no interest while waiting for the plunge in bonds to come. I agree it is a good game plan but since no one whos have long we have to wait, what about a bond latter so 5 to 10 years. Hedge with TBT.