Home price upswing: Seasonal or not?
Posted on September 29, 2009 at 2:25 pmWell, that depends on who’s dissecting the new Case-Shiller numbers: Hedge fund manager Tom Brown says the housing bears need a new excuse.
…[S]equential monthly improvement in the index usually deteriorates seasonally in July. This month, though, the change in the rate of change rose by 18 bps. So instead of a seasonally monthly slowing, we’re seeing month-on-month acceleration.
CNBC’s Diana Olick says the numbers are a lot closer to reality when they’re seasonally adjusted.
whether we’re in a housing boom or bust, home prices always rise in the spring/summer months, due to the type of buyer largely in the market. Families, i.e. move-up home buyers, looking to close and move over the summer so as not to disrupt school, dominate the market in the spring and summer.
They are, for the most part, buying larger, more expensive homes, and they therefore skew the median home price in their market higher. In the fall and winter, you tend to see more first-time buyers as well as more single buyers who want smaller, lower-priced homes.
Stephen Stanley of RBS says focusing on seasonality doesn’t matter too much; the improvements are simply a case of the market coming off the absolute bottom of early this year.
…[I]n retrospect, a rebound of some magnitude was likely as demand recovered from non-existent to merely weak.
Case-Shiller least worst in 14 months
Posted on August 25, 2009 at 8:32 amBecause it’s hard to say the home price index for 20 of the country’s largest cities (but not Nashville) is in good shape when it’s down ‘only’ 15.4 percent.
From a month earlier, home prices climbed 1.4 percent in June, the second consecutive gain and the biggest since June 2005, today’s report showed. The figures aren’t adjusted for seasonal effects, so economists prefer to focus on year-over- year changes instead of month to month.
“We are seeing some positive signs,” David Blitzer, chairman of the index committee at S&P, said in a statement. “There are hints of an upward turn from a bottom.”
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Shiller: We may be inflating another bubble
Posted on August 19, 2009 at 12:10 pm
The downer note of the day comes from Robert Shiller – half of the pair that developed the Case-Shiller housing price index – says the recession’s drop in home prices could set us up for another bout with a bubble.
“The low interest rates, the affordability is leaning that way and the ratios are back down,” Shiller said in a live interview. “I get glimmers of excitement among some people, but we still have a high inventory of unsold homes, and we still have a lot of weariness because of the recent experience.”
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Why we need to be skeptical about Case-Shiller
Posted on July 29, 2009 at 2:06 pm
Economist David Rosenberg says the noted home-price index’s methodology — which earlier this week showed its first rise in many months — is now out of whack. A big reason is that the crunch being felt by more affluent homeowners.
An increasing number of high-end homes are now entering the foreclosure sales process, which are skewing these price indices higher after a prolonged period when the data were being pulled down by the preponderance of ever-cheaper subprime units hitting the auction market. As an aside, at the beginning of the year when prices were sliding more than 2% per month, half the sales were coming from foreclosure auctions and many of these were low-end units; now the foreclosure share is down to 30% and more of these are higher-end homes seeing as prime-based mortgage default rates are now rising faster than subprime.
Rosenberg also pointed out that high apartment vacancy rates will “continue to provide competitive pressure to the homeownership market” and that the national backlog of more than 800,000 vacant homes will further push down prices — up to 25 percent if “the insanity” of 2001-2006 is fully unwound.
This is what happens after bubbles burst — every bubble. Prices go to stupid cheap levels.
HT: Alphaville
Case-Shiller rises for first time in three years
Posted on July 28, 2009 at 2:24 pmBut several people, including one of the founders of the famous home-price index, say the housing market is nowhere near out of the woods.
While acknowledging that the report was good news, Mark Zandi, chief economist for Moody’s Economy.com, downplayed the importance of a single month’s statistics.
“I think it’s a temporary respite,” he said. “It reflects the recent decline in foreclosure sales, and prices will continue to fall over the next several months.”
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