Any day now

But not quite yet. House prices continue to fall.

The Case-Shiller has been signalling an improvement in the second derivative of housing prices for a few months, and in the latest report it even showed a sequential increase. But check out the NAR’s numbers for all of Q2. The year-over-year drop in the median sales price of single family homes showed its worst decline ever. They didn’t even have a second derivative gain improvement.

chart of the day


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9 responses to “Any day now

  1. shoeless

    Prices dropped by a record 15.6% in the second quarter. Record, as in never dropped this fast – ever. Green Shoots! Green Shoots!

    And now a little interlude. I Give you Journey’s – Option Arms

    Journey — Option ARMs

    Lying to Congress, here in the dark
    Co-mingling your TARP cash with mine
    Softly you whisper, you’re second’s unsecured
    How could our loans be so blind
    We failed on together
    We grifted apart
    And here your apps been denied

    So now I come to you, with Option ARMs
    Nothing to doc, believe what I say
    So here I am with Option ARMs
    Hoping you’ll see what your loan means to me
    Option ARMs

    Living without you, living alone
    This empty house seems so cold
    Wanting to mod you, wanting you near
    How much I wanted your home

    But now that youve come back
    Turned refi to pay
    I need you to stay

    So now I come to you, with Option ARMs
    Nothing to doc, believe what I say
    So here I am with Option ARMs
    Hoping youll see what your loan means to me
    Option ARMs

  2. Krazy Kat


    Come on! I know you have a view and you are not shy about sharing it. We also know that the Business Insider guys have a view that is somewhere more negative than yours. But I would expect you to more seriously consider the context in which the Clusterstock folks present data, particularly housing data.

    The raw data from the National Association of REALTORS can be found one this site:

    Below is an excerpt from the single family home sales price data series (I will send you the graph of the data shortly, post if you choose).

    U.S. Northeast
    Sept 190,300 255,400
    Oct 185,700 242,500
    Nov 179,900 266,700
    Dec 175,000 237,200
    Jan 164,200 230,600
    Feb 167,900 242,100
    Mar 169,700 232,900
    Apr 166,000 241,800
    May 174,600 246,300
    Jun 181,600 250,000

    Jun09 vs
    Jun08 -15.0% -6.1%

    So yes, on a year-over-year basis, median prices were down 15% nationally. However, this data series shows prices bottomed in January across all regions. I included the Northeast data set below which also shows a y-o-y decline, but less than half the decline nationally (the worst region was the West which is down almost 24% for the same period).

    When you see the chart of the monthly data, you will see each region shows a bottom early this year and that each is drifting upward. Thus, contrary to Weisenthal’s contention, not only has the 2nd derivative turned positive but the first derivative is positive as well.

    Sorry, but I work with numbers all day long and I abhor when someone plays fast and loose with analysis. This is a MONTHLY dataset and trends (derivative or otherwise) should be focused on the monthly data trends, not necessarily the y-o-y pattern. Sure, looking at how much prices have fallen in the L12m is important, but what we all care about is direction and trajectory and that is revealed in the month-to-month data trends.

  3. Krazy Kat


    It is amazing how you doomsayers can show up almost anywhere online.

    Why don’t you review the month to month data and tell me why your and others focus on the year-over-year is more appropriate when looking for directional change?

    Don’t get me wrong, I think we are still in an ugly place and it will be years before there is real recovery. At the same time, I think we all need to be honest with the data, no matter whether it agrees with our perspective (and wishes) or not.

  4. HG

    I agree with Krazy Kat. I may think home prices especially in NYC / Greenwich should go down more, I may think they will resume going down, but anecdotally it does not seem to me prices are dropping right now…the market is still locked up as CF’s exhaustive look at Greenwich shows, but the price at which a given property will clear has probably been the same since Jan / Feb and it does seem like there has been some pick up in sales activity. (I would even interpret lag time between CF postings to FWIW as a potential positive indicator…i.e., more activity, more house shopping, etc).

  5. shoeless


    Do you really use monthly numbers to do your analysis? Here are some monthly new home sales numbers for June:

    Sales of new one-family houses in June 2009 were at a seasonally adjusted annual rate of 384,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 11.0 percent (±13.2%)* above the revised May rate of 346,000, but is 21.3 percent (±11.4%) below the June 2008 estimate of 488,000.

    The 11% increase in June was not even statistically significant, but the Y-o-Y number sure was. So inside the statistical error, June could have been poisitive or negative, but Y-o-Y could not. That’s why monthly data is not used.

  6. Krazy Kat

    Given what occurred last September, I am not sure how comparing y-o-y figures is useful when trying to mark a stop inthe free fall in prices and the beginning of stabalization. By your methodology, you won’t see a turn until late this year or early next, assuming current month-to-month trends continue. That may or may not be true but you won’t know until you get to the series low (currently) which is not particularly timely.

    I wonder, when you are evaluating the momentum of the stock market, do you look at near-term trends (daily, weekly or monthly) or longer term (year over year)? I would hope both. It’s one of the reasons chartists use the 50 and 200 day moving averages as a move in the 50 will not be reflected in the 200 until it is well established.

    I appreciate that reversion to the mean is important in all markets but that perspective is usually useful only in retrospect and not terribly helpful in real-time. Tops and bottoms are difficult to call contemporaneously which is why so few managers and pundits get it right (William O’Neill being a rare exception on several major ocassions).

    Chris chose not to post it but I charted the 3-month moving average of the NAR pricing numbers to smooth out any m-t-m volatility. What that treatment showed was also a bottoming in the Spring.

    Now, if you want to find some really interesting (and worrisome) housing sale data, check the charts at this link with a focus on the percentage of distressed sales:

    I would point out the linked report which is a treasure trove of data for those interested in RE.

  7. Krazy Kat

    Shoe less: One last thought, when looking at the NAR data (see the link in my prior comment), look at the regionality of the pricing data. The West is getting clobbered much worse than the rest of the country and was a heavy contributor to the -15% for the national prices. As Chris will remind us often, it is still a business about location.

  8. shoeless


    Thanks for the calculated risk link, I saw that last night. In looking at the regional data, what is interesting is that the upturn in sales volume is coincident with the area that have declined most severely. Prices are off more than 50% from the peak in CA and now there is an active market.

    This behavior will be repeated accross the country as volumes will only pick up as we reach equalibrium in prices in other areas. The large disconnect between bid and ask in the Northeast will be taken care of by the banks eventually, who remain saddled with spec houses (and eventually option ARM’s), and have no emotional attachment to the properties that they will invariably “own”.

    The most intersting item in the link you provided was the lack of “move-up” buyers. The meat of the Greenwich market is dependent on move-ups. That’s why the $1-$2mm price range has the largest inventory and one of the lowest (percentage-wise) sales rates.

  9. Krazy Kat

    Shoe less:

    This is late after the initial post so not sure CF will post or you will read but here goes.

    Yes, Greenwich has been mainly a move up market. Of all the home sales that I personally know of over the past decade, they likely run 2/3 move up (in town) and the balance new blood. but then again, being a 15+ year resident, it is logical that I would know more locals.

    I think it best to think of the overbuilt markets (CA, AZ, NV, FL, etc) having had their market bubbles pricked violently due to the mortgage dynamics of the most recent buyers and the over building that is plaguing these areas. Greenwich on the other hand is like a slow deflation. Will we reach peak to trough valuations similar to those other markets (down 40-50%)? I don’t think so though I agree that we have not yet his bottom, simply because the bid-offer spread is still too wide. That said, I wonder if other dynamics like tax-driven flight out of NYC/Westchester, recovering Wall Street compensation, etc may cushion the market.

    Time will tell. Glad to hear that there are others who are regular readers of CalculatedRisk as I think that is one of the better data aggregators around.

    BTW, I am in Florida and will be looking at Miami/Key Biscayne real estate tomorrow. I will report back to Chris as to what I see. Should be interesting.