Yet Another Bad Month for the Case-Shiller HPI

Submitted by Rich Toscano on February 26, 2008 - 7:26pm

The Case-Shiller HPI numbers for December were released today. The low-, mid-, and high-priced tiers were respectively down 3.8%, 3.3%, and 3.1% from the prior month. The aggregate index was down 3.4%. The pace is picking up for the correction on the high-end -- December represents the first monthly decline of over 2% (let alone over 3%) for that tier.

The tally for calendar year 2007 was: -23.1% for the low tier, -16.0% for the middle tier, -8.6% for the high tier, and -15.0% overall.

From their respective peaks through December, the low, mid, and high tiers were down 26.3%, 21.0%, and 13.1%.

My estimate for the aggregate December decline was pretty close -- my guess (which is simply based on the 3-month moving average of the detached size-adjusted median) was 3.3% vs. the actual 3.4% decline. From the November 2005 peak through December 2007, San Diego home prices in aggregate were down 19.1%. Below is the aggregate index since the peak, with the orange bit denoting the January estimate.

Factoring in inflation, the real price decline has of course been even more brutal:

Yet despite the severity of the price declines, real home prices are still well above their levels as of the peak of the 1990 bubble.

As I'm fond of pointing out, the high tier's apparent resilience less to do with nice neighborhoods' alleged invulnerability than with the fact that low-priced homes overshot fair value by a lot farther. Homes of all stripes remain seriously overvalued and thus vulnerable to substantial further decline. I'll get more into this topic soon when I have a chance to update some of the long-term valuation charts.

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Submitted by Michelle Steffes on February 27, 2008 - 3:24pm.

Michelle Steffes

Isn't it about time for the NAR to call the bottom or have they simply stopped the boosterism?

Submitted by Downtowner on February 27, 2008 - 4:02pm.

You must have missed the article in yesterday's SDUT. Here is the quote from a NAR eco-nut:

"Lawrence Yun, chief economist for the Realtors, said the housing market may be on the verge of bottoming out, with a rebound expected to start toward the end of this year.

Yun said he expected demand to be bolstered in coming months by the housing sections of the $168 billion economic stimulus bill passed this month. Those provisions raise the caps on the size of loans that can be backed by Fannie Mae and Freddie Mac and the Federal Housing Administration, an increase expected to provide help in high-cost areas of the country such as California.

I plan on buying a house with my $600!

Submitted by Fearful on February 27, 2008 - 10:14pm.

Will the declines be well enough entrenched by the time LFKAJ (Loans Formerly Known As Jumbo) GSE loans are made available to make the decreased interest costs irrelevant?

We won't see the effect in the HPI for another three, four months or so.

If anything, the market for loans between $417K and the new cap will have temporarily locked up with buyers anticipating lower future loan rates.

Will the new GSE loans even be much cheaper than their predecessors? Whatever. Can anything save this sinking ship now?

Submitted by yellow8yellowm on February 28, 2008 - 8:24am.

Is the Case-Shiller raw data public? I would like to use it to compile separate charts for the zip codes I am considering. I am not at all interested in how far Chula Vista or Spring Valley drops. I am looking at the middle tier and know that both the upper and lower tier will skew those results.

Submitted by Wondering on February 28, 2008 - 2:00pm.

National Inquirer has more creditability than NAR. It is inconceviable to me how Yun can make such outragious comments with a straight face.

NAR should better be know as National Association of Retards, or better yet, NAL - National Association of Liars.

Submitted by CricketOnTheHearth on February 28, 2008 - 6:17pm.

We are simply seeing desperate attempts by the realtors to push on the public sentiment string.

"Please, oh please let a sucker come out of the woodwork in time to give me a commission in time to let me pay my resetting mortgage payments for 2 more months!"

Some incredible tales on BMIT-- these guys drank each others' KoolAid too.


Submitted by Fearful on February 28, 2008 - 10:05pm.

Is the Case-Shiller raw data public?

I do not think so. You can get the tiered data, of course, and some data on the quantity of sale pairs each month. Even if you got the data, I would be very careful trying to break it down as the data will get noisy the smaller the geographical area you try to evaluate.

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