Interactive Map of Case Shiller Home Price Drop from Peak; Reflections on Flying Monkeys

Tim Ellis at the Seattle Bubble blog sent me an email along with an interesting map of data on Case Shiller 20 metropolitan housing market index in Tableau form. Please give the table a few seconds to load.



Hover over any of the 20 cities to see decline from peak. For Tim's post Friday Flashback: Case-Shiller Home Price Losses Mapped

Tim pointed out one amusing post by Greg Swan at BloodHoundBlog. I am going to post a larger snip. Please consider 21 reasons to bank on the Phoenix real estate market written July 21, 2006.

HousingPanic, a particularly vitriolic BubbleBlog — which is saying something — asks: Realistically, how overvalued are Phoenix home prices?

Obviously, I consider this a profoundly silly question, but to lurk among the BubbleBloggers and their seething commentariat is to acquire an education in a slice of America invisible from this side of the sewer gratings. Notwithstanding the idiotic economic analysis, which is really no worse than the static-market fallacies paraded as profundities in the pages of the Arizona Republic, these sites — and not just HousingPanic — are infested with a cult-like fever to inflict suffering — at second hand, to be sure — on people who are in fact guilty of nothing except failing to have drunk the BubbleBlogger KoolAde.

That’s all one. I don’t care. The whole of the last century was dominated by the bad behavior of viciously angry wretches, but look where it got them. The BubbleBloggers will someday bawl balefully in private, but they will never, ever admit that they have been very publicly very foolish. You will know and I will know and in the secret chambers of their hearts they will know they were wrong all along. But as long as you don’t hold your breath waiting for that contrite admission of error, you should be fine.

Here’s where I do start to care. Whenever the subject of Phoenix comes up in a BubbleBlog, the assembled Brown Shirts pile on, for whatever reason. ...

Which brings me back to HousingPanic’s question. We keep our own home sales price statistics, so we have no doubt that values are down from their high in December. How much? Right now, about 4%. Could they go lower? Certainly. Will they drop by the huge amounts HousingPanic and his flying monkeys seem to yearn for? This seems very unlikely.

What seems much more likely is that Phoenix will recover from the hangover of last year’s buying binge and get back to a steady rate of growth — historically 6% a year. The reason this should happen is very simple: Population growth. ...

Greg Swan, super Phoenix bull drones on with 21 preposterous reasons why Phoenix will not crash. All of his reasons were rebutted at the time and in detail by myself and others so many times and in so many places, I could fill up pages listing them.

To name a single name, Professor Piggington was among the first with a complete analysis, not of Phoenix per se, but a thorough, and sound analysis why the population argument did not hold up.

I posted my own chart of where the bubble was on March 26, 2005 in It's a Totally New Paradigm





San Diego Home Prices (with thanks to piggington)

The first chart above is mine. I added the annotations on the second chart, created by Professor Piggington.

Here is my favorite quote at the time.

Gregory J. Heym, the chief economist at Brown Harris Stevens, is not sold on the inevitability of a downturn. He bases his confidence in the market on things like continuing low mortgage rates, high Wall Street bonuses and the tax benefits of home ownership. "It is a new paradigm" he said.

I have updated that chart many times over the years, including Collapse Of The "Ownership Society" August 16, 2009.

I need to move the arrow another notch.

We now have the truth. It was not a "new paradigm". Price-to-rent and price-to-wage matters.

Doug Swan "Notwithstanding the idiotic economic analysis, which is really no worse than the static-market fallacies paraded as profundities in the pages of the Arizona Republic, these sites — and not just HousingPanic — are infested with a cult-like fever to inflict suffering — at second hand, to be sure — on people who are in fact guilty of nothing except failing to have drunk the BubbleBlogger KoolAde. ... Right now, [prices are about 4% lower]. Could they go lower? Certainly. Will they drop by the huge amounts HousingPanic and his flying monkeys seem to yearn for? This seems very unlikely."

Who's the Flying Monkey?



It was Greg Swan's self-serving economic analysis and hype (and tens of thousands of other Realtors as well) that helped lure dumb speculators into "can't lose" Phoenix. Prices are now 54.7% off the peak in June 2006.

Greg Swan called housing bears "flying monkeys" right as his area peaked. I believe congratulations are in order. It's not easy to be that boldly inept.

Addendum:

Reader Ron asks ...

"I am very interested in the Phoenix housing data, however given the commentary below I cannot tell either context or time frame. Is Phoenix improving or declining? I cannot tell from your article. Can you elaborate in terms and time frame that would explain?"

Hello Ron

Phoenix may easily be close to the bottom given the drop. However, I would not expect significant appreciation for years even IF it is at the bottom. That holds true for any area bottoming. I think parts of Florida have probably bottomed as well, but prices could easily stagnate for a decade.

In general, the last bubble is not reblown for decades. Look at the Nasdaq or better yet, the Nikkei.

If you are thinking of moving to and living in Phoenix, I believe the worst of the decline is over. However, if you are thinking about the rental market, you need to be very careful if you do not know what you are doing.

Please see Phoenix Property Scam Targets Australian and New Zealand Buyers for details. I strongly suggest not attempting to manage property from a distance.

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