April Case-Shiller Index

Submitted by Rich Toscano on June 24, 2008 - 11:04am

It was business as usual for the Case-Shiller Index in April, with a fairly steep 2.6% drop in the overall index comprised of progressively worse performance in each lower-price tier. This time, the high tier was down 1.5%, the middle tier 2.7%, and the low tier 3.5%.

Here is a look at the three tiers since the peak. Notice how I keep having to change the scale on the Y axis each month to accommodate the continued whackage on the low tier:

...and the same thing adjusted for CPI inflation. (I realize that it's better to measure home prices against rents and incomes, but up-to-date rent and income data is harder to come by. I will try to do an update of the price vs. rent and income charts soon).

Here are long term version of the above two charts, highlighting the extent to which lower tier prices became much more out of whack:

And just for giggles approximately the same chart zooming in on this decade.

Incidentally, the 2.6% overall decline in the aggregate index was in the ballpark of the 2.9% drop that had been predicted by my Case-Shiller HPI proxy based on the median price per square foot. The proxy is predicting a much smaller decline of .9% for May. Because the proxy is more volatile than the HPI itself, my guess is that the decline in the HPI will be higher than .9% but perhaps quite a bit lower than it has been in recent months. This will probably prompt some pundits to call another bottom, which will in turn prompt me to laugh heartily and with derision.

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Submitted by DWCAP on June 24, 2008 - 4:27pm.

I had no idea "whackage" was even a word. You learn something new everyday.

Submitted by Rich Toscano on June 24, 2008 - 6:39pm.

According to my spell checker, it isn't a word. Fight the power!

Rich

PS - Forgot to include this tidbit in the article: the April HPI is down below its Nov 2003 level, and adjusted for CPI inflation it's down below the Nov 2002 number. Ouch.

Submitted by ltokuda on June 25, 2008 - 1:09am.

That's not just any type of "whackage" we're seeing on the low tier. They're getting some "major whackage"!

Submitted by moneymaker on June 25, 2008 - 2:00am.

from peak to peak on the high priced homes I am guessing a return of about 3.6%, looks like Schiller is right!

Submitted by gdcox on June 25, 2008 - 7:29am.

The Financial Times makes an obvious point today that is only so once you read it: ie noone else has mentioned it.
Due to measurement days, the 'April' CS index records transaction agreed early in the year...............when fixed rate mortgages were much cheaper.

Rich mentions that the 'May' number may be lower, and the same logic will apply.

By the way are Piggs seeing any evidence of the now much higher fixed mortgage rates having an impact?

PS Rich, you can't see your posts on the main page now!!!!!

Submitted by 34f3f3f on June 25, 2008 - 8:04am.

I see the tier parameters are also finally changing, so the higher tier homes are now in the $500k bracket, which will improve the declines, but it makes me wonder if there shouldn't be a category for sticky tiers.

I'm glad Rich mentioned to which month (April) these data refer, because all accounts I'd seen yesterday on other blogs and the media failed to mention it.

Submitted by gdcox on June 25, 2008 - 8:54am.

qwerty007
The figures do not refer to April. They refer to mid-March for it is the average of the three month to April. Given that these are final prices and that the signatures are previous by about 90 days of escrow, the latest data refers to deals agreed on a point centred on Feb 1st. (Rich , please correct if wrong).

Submitted by Rich Toscano on June 25, 2008 - 9:31am.

gdcox wrote:
qwerty007
The figures do not refer to April. They refer to mid-March for it is the average of the three month to April. Given that these are final prices and that the signatures are previous by about 90 days of escrow, the latest data refers to deals agreed on a point centred on Feb 1st. (Rich , please correct if wrong).

Correct as usual gdcox... to simplify things i refer to the April index number but beneath the hood, the April index is comprised of the trailing 3 months of data so is a more accurate representation of mid-March than anything else.

I sometimes go into this but it's kind of unwieldy so I gloss over it sometimes.

You raise a very interesting point about rates. So far the median-based price figures suggest that it hasn't had much impact:

http://piggington.com/may_resale_housing...

(this wouldn't surprise me; I think that the importance of rate levels is overrated).

Re. the listing of main articles on the sidebar, that was a plugin that has not been updated for this version of the content management system. If it ever becomes available again i will put it back in there.

Rich

Submitted by bobl on June 27, 2008 - 1:33pm.

2 Questions:
1) Will the housing bailout looming in congress affect where/when prices bottom out?
2) And related to this, will the impact of the next wave of Alt-A/Option ARM resets be mitigated by the bailout?

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