CASE/SHILLER: THE HOUSING DOUBLE DIP CONTINUES
This morning’s Case/Shiller housing data confirms what we have long feared - the housing double dip is here.
Data through December 2010, released today by Standard & Poor’s for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, show that the U.S. National Home Price Index declined by 3.9% during the fourth quarter of 2010. The National Index is down 4.1% versus the fourth quarter of 2009, which is the lowest annual growth rate since the third quarter of 2009, when prices were falling at an 8.6% annual rate. As of December 2010, 18 of the 20 MSAs covered by S&P/Case-Shiller Home Price Indices and both monthly composites were down compared to December 2009. Both Los Angeles and San Francisco reported negative annual rates of return in December, leaving San Diego and Washington DC as the only two cities where home prices are increasing on a year-over-year basis, +1.7% and +4.1%, respectively.
David Blitzer of S&P elaborated on the results:
“We ended 2010 with a weak report. The National Index is down 4.1% from the fourth quarter of 2009
and 18 of 20 cities are down over the last 12 months. Both monthly Composites and the National Index
are moving closer to their 2009 troughs. The National Index is within a percentage point of the low it set
in the first quarter of 2009. Despite improvements in the overall economy, housing continues to drift
lower and weaker.”
As Ben Bernanke touts the rise of equities he conveniently ignores the continuing decline in the consumer’s largest asset. This morning’s report shows that QE is having little to no impact on the real economy as the real estate market remains mired in a deep recession. We are likely to see some seasonal strength later this spring and summer, however, the fundamentals for the national housing market remain very poor as the supply/demand imbalance remains.
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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The collapse of the housing asset bubble, leaving exposure of the massive private debt level led us into the financial crisis. The FED (ZIRP) and Gov’ (stimulus) intervention is pumping feverishly on the Equity market while BB sweeps the ugly double dipping Housing Market under the TARP. Now WW events are poking a multitude of holes in the balloon. Bailing out the FIRE industry without clearing the debt overhang, restructuring of loans and not prosecuting crime has caused much more damage to economic recovery efforts by eroding the American confidence in the markets, leadership and rule of law. Without a strong, healthy and confident middle class the economy will continue to struggle. It is definitely ugly out there.
Bull market in Washington, D.C., driven by the policies of the great socialist leader Obozo
It takes an army of bureaucrats to supervise stealing from the middle class to give to the rich. And an army of well-paid lobbyists to keep Congress and Exec branch to continue to authorize it.
The middle class were once employed before being robbed and thrown out into the street. No job, no prospect for a job. The only numbers that have appreciated substantially are stocks, bonds, housing and employment all through the manipulation of banking industries financial statements and statistics from Washington. Everyone seems to think that simply forming reality according to ones wants is how one should live life…why not, our economy has been operating on this principle for over 30 years.
When growing up most of us were told that misrepresenting the truth would always catch up to you. While most of us have learned this lesson WS, Greenspan, Washington, corporate leaders and politicians seemed to think they are immune to this principle.
ooops I left off Bernanke.
I’ve been saying for a year on this website and others that there is no housing bottom in sight. I’ve provided hard-to-find data, graphs, charts and tables to support this view. Now one major index after another is showing confirmation that my analysis is solid.
How about this one. I have what looks like a reliable data source which shows there are roughly 80,000 defaulted properties (pre-foreclosures) in Miami-Dade County that have not yet been foreclosed. And this does not include the 26,000+ seriously delinquent properties that have not yet been put into default.
Do you think these properties can be cleared in the next 2-3 years without prices dropping substantially even from today’s low prices? No way. It’s going to get ugly in Miami.
How much further do we go Keith? I’ve been saying that ~10% is the likely case and that 10-20% is the worst case. You think we can go lower?
Writing from Central Fla, I would say that 10% is a certainty. 20% is likely. Nothing is moving here.
The east coast is being hammered – it was a latecomer to the bubble, and is suffering from aerospace lay-offs (remember, the shuttle is supposed to be phased out this year – and there is nothing in the pipeline to replace it).
Orlando is still reeling from the evaporation of tourist dollars – something that does not look to be turning around any time soon.
While Miami-Dade gets the lion’s share of the attention, the southwest coast (esp. Lehigh Acres) is in my opinion the real story.
This is my thinking: Southeast Fla will keep falling, but it will come back faster: once a bottom has been established, I expect to see wealthier Latin Americans moving back into that market.
But SW Florida was long the arrival of retiring boomers, and we might see a repeat of the “Golden Gates Estates” fiasco.
I think it can go lower Cullen, but I doubt it. At least not nominally. I would not be surprised if prices went down over the next ten years 35% or more from here in real terms.
So long as we continue to engineer an economy that subsidizes the a few key industries at the expense of the American people, the income and purchasing power of the public will continue to deteriorate, and housing prices will do the same.
The economy is facing headwinds on almost every front, and we have put ourselves in a position of weakness by way of our dependence on foreign energy. As we are seeing now in the Middle East, we are now at the mercy of international events. Should the turmoil spread to Saudi Arabia, we could see a real a true economic calamity here in the US.
We could also see a scrambling of world powers to secure oil supplies in the region by what ever means possible including war.