Case Shiller and CAR Analysis February 2009 Release

California Association of Realtors C.A.R. Data

The following chart is from my friend "TC" who has been monitoring California Association of Realtors (C.A.R.) and DQNews data. C.A.R. data contains resale single family residences and new homes. DQNews data contains resale single family residences and new homes.

click on any chart in this post for sharper image



Median nominal prices in CA are now down 57% according to CAR and 53% according to DQNews - and those declines are in 20-21 months!

Case-Shiller is a more accurate way of looking at home prices than median prices. Case-Shiller data follows.

Case Shiller Home Price Release

Inquiring minds are considering the Case Shiller Home Price Release for February 2009.

Nationally, Home Price Declines Closed Out 2008 with Record Lows According to the S&P/Case-Shiller Home Prices Indices

New York, February 24, 2009 – Data through December 2008, released today by Standard & Poor’s for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, show that the prices of existing single family homes across the United States continue to set record declines, a trend that prevailed throughout all of 2007 and 2008.



The chart above depicts the annual returns of the U.S. National Home Price, the 10-City Composite and the 20-City Composite Indices. The decline in the S&P/Case-Shiller U.S. National Home Price Index – which covers all nine U.S. census divisions – recorded an 18.2% decline in the 4th quarter of 2008 versus the 4th quarter of 2007, the largest in the series’ 21-year history. The 10-City and 20-City Composites also set new records, with annual declines of 19.2% and 18.5%, respectively.



The chart above shows the index levels for the U.S. National Home Price, as well as its annual returns. As of December 2008, average home prices across the United States are at similar levels to what they were in the third quarter of 2003. From the peak in the second quarter of 2006, average home prices are down 26.7%.

Please see the original article for more commentary and tables on the data.

Case-Shiller Declines Since Peak

The following charts were produced by my friend "TC" who has been monitoring Case-Shiller Data. Although individual cities topped at varying times, the top-10 and top-20 city composites peaked in a June-July 2006 timeframe.

Case-Shiller Declines Since Peak Current Data



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Case-Shiller Declines Since Peak Futures Data



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"TC" writes:

The Dec 2008 Case-Shiller data continues to accelerate to the downside. The 10 and 20 city index show declines from their peak nearing 30% and the bubble cities (along with Detroit) all have declines in excess of 35% with Phoenix having the largest percentage drop of -46%. It is important for readers to know that Case-Shiller uses a Repeated Sales Methodology (RSM) which provides the most accurate housing data available. Additionally, there are two newer columns titled "Price Level" which show both the last time prices were at the current level and what price level prices are projected to decline to based upon the CME Futures market. The most extreme bubble city decline is San Francisco which is at prices last seen in March 2002. However, the most extreme overall city is Detroit which has now reverted to prices last seen in nearly 12 years ago (May 1997).

California Association of Realtors (CAR) & DQ News - Jan 2009
The Jan 2009 CAR data also continues to accelerate to the downside. This data does not use the Repeated Sales Methodology (as Case-Shiller does) and consequently can be biased based upon the sales pool. Additionally, the DQ News data includes the sale of new homes and resales; whereas the CAR data only includes resales. It is this partially biased sample pool that is causing prices to show average declines of 55% over the past 20 months! The median CA home resale price has now declined an amazing $343,000! The largest percentage declines are Monterey County where prices are down more than 70% or $570,000! The largest prices declines are in the high rent areas and specifically Santa Barbara South Coast with prices declines of nearly $800,000!

Thanks "TC"

My take is unemployment is going to soar in 2009 along with foreclosures, credit card writeoffs, and bankruptcies. That will add to the inventory problems. Thus it is extremely unlikely that housing bottoms anytime soon.

And as much as housing prices have declined, take another look at the second chart in the news release above. Imagine where prices will be if they fall back to 2002 levels or worse yet 2000 levels. Moreover, why shouldn't prices fall back that far? Finally, how many are prepared for it, if indeed that were that to happen?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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