from Rueters:

Prices of U.S. single-family homes rose for the second consecutive month in June, adding to evidence that the three-year housing slump is easing, Standard & Poor’s reported on Tuesday.

The S&P/Case-Shiller composite indexes of 10 and 20 metropolitan areas both rose 1.4 percent in June from May, almost three times the 0.5 percent increases of the month before. May’s increases were the first in nearly three years.

S&P also said its U.S. National Home Price Index recorded a 14.9 percent decline for the second quarter, compared with a 19.1 percent year-over-year drop in the first quarter.

Compared with the first quarter, though, prices rose by 2.9 percent, marking the first such increase in three years.

Don’t get too excited, San Diego’s June number was 146.09, a measly 0.67% increase from May’s 145.12 – we’re all the way back to March’s number! 

Take it all with a grain of salt, with emphasis on the local numbers. Like these from Altos Research:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sellers gravitate towards the good news only – expect that their confidence will be artificially inflated, like a lot of other things. 

Places like Oceanside may be hot with FHA/VA buyers, causing some wild blog stories, but looking at these graphs, there doesn’t appear to be much pricing pressure in Carlsbad (or other similar areas).  The shorter-term will have some spikes, but the 90-day is the trend. 

We might see a flurry or two, here and there, but it would take a consistent string of months’ or years’ worth of improvement before many will be impressed.  

People with bigger down payments are choosier, which keeps a lid on pricing.

15 Comments

  1. Former RB Resident

    Its a trend of stability, though, which is not a bad thing. A wild market can make both sides irrational. If things are stable, then sellers and buyers can begin to look at things more rationally.

  2. arizonadude

    I guess its a good time to buy cause that is what everyone is telling us to do.I trust the experts opinions.

  3. shadash

    My personal theory is the FHA buyers are the type that spend any kind of credit extended to them.

    I agree with Jim that the above 500k marker will be the true test. These are the ones that have to bring $$$ to the table to get a mortgage.

    People tend to be MUCH more conservative when spending $$$ when that money has been earned through work rather than the magic equity machine.

  4. Mozart

    It’s true that the data needs to be taken with a grain of salt but it is some sweet news to me. And, if Carlsbad is still diving then how do we account for red-hot Carmel Valley? The commute? Seems comparable.

    The previous post about the flippers also indicates again that first time home owners are now stepping into the market after the investors have had their run. We can expect to see the middle start pulling up the same way, including Carlsbad.

  5. 3clicks from da beach

    Good point Mozart. I liken CV to Simplex 1 and 2. CV is viral shredding and there is no cure. The good thing is that the condition/symptoms ease up over time in both cases.

  6. Mozart

    Yeah, I don’t think it’s like that. Viral shredding? Yuck.

  7. Rob Dawg

    The return of seasonality looks like stability after three years of decreasing seasonality.

    Wake me when there are move up buyers taking both ends of the deal. [Moving up and selling the current home.]

  8. osidebuyer

    shadash, FYI, I used FHA and I have excellent credit, little debt, and cash reserves. Maybe I’m the exception.

  9. Pigpen

    Osidebuyer, as a taxpayer and I dont blame you. I blame policymakers pushing the ownership society. I have a problem with 3% down payments to control an asset worth $300 k. The leverage is too insane still and the homeowner is still leveraged 33x. After watching property values rise and fall by over 30% in the last decade. I think anyone regardless of ideology would agree that 3% down is too little to incentivize someone to stay in a house when prices are falling. Since I am the taxpayer and the rube who has to clean up this mess, I wish the policy would just make downpayments 20% across the board. I now I am quixotic and simple minded and irrational but I can dream.

  10. sdbri

    I’m not surprised that prices have stopped rapidly falling. Prices are simply no longer ridiculous, just plain California expensive.

    If you don’t have the down payment but everything else, FHA is the way to go.

  11. arizonadude

    I cant wait for the banks to bring back stated income loans so more deserving people can buy.After the taxpayer picks up the tab for the banks incompetence it will be back to business as usual.Thank god the govt printed trillions of dolars so we could save the economy from ourselves.

  12. Ronald McMansion

    Here’s an interesting commentary explaining why so many of the loans are FHA and why inflation is not a concern in the short term.

    Banks have a ticking time bomb on their books, so they’re capitalizing in anticipation of greater losses to come. Unless people are coming to them with significant down payments and stellar credit, they probably won’t get a loan. That leaves FHA and the white hot low end.

    http://web-xp2a-pws.ntrs.com/content//media/attachment/data/econ_research/0908/document/dd081909.pdf?utm_source=mortgagenewsclips+test+list&utm_campaign=0b616a26b6-RSS_EMAIL_CAMPAIGN&utm_medium=email

    If Inflation Is a Monetary Phenomenon, Is U.S. Hyperinflation a Clear and Present
    Danger?
    August 19, 2009

    Take a look at Chart 2, which plots the behavior of the M2 money supply on a six-month
    annualized basis. After the spike to 15.2% annualized growth in February of this year, in the six
    months ended July, annualized M2 growth was only 2.7%. Barring another surge in M2 growth,
    this sharp six-month deceleration in M2 growth implies a continued deceleration in year-over-
    year M2 growth and, thus, a reduced likelihood of a repeat of the 1970s high-inflation environment.

    ****

    How is it that the explosion in assets on the Fed’s balance sheet from approximately $901 billion
    at the end of July 2007 to approximately $2 trillion at the end of July 2009 (see Chart 3) has not
    resulted in a sustained explosion in M2 money supply growth? Because of the extraordinary
    increase in excess, or idle, cash reserves on the books of banks. As shown in Chart 4, banks’
    excess reserves soared from only $1.6 billion in July 2007 to almost $733 billion in July 2009. So,
    about 64% of the increase in Fed assets in the two years ended July 2009 was accounted for by
    the increase in idle cash reserves sitting on the books of banks. A further 8.5% of the two-year
    increase in Fed assets was accounted for by an increase in currency in our pockets and/or
    squirreled away in our safe deposit boxes (see Chart 5). This dramatic increase in the demand for
    “folding money” was likely the result of an extreme case of risk aversion rather than a preparation for a shopping splurge (other than for canned goods and ammo, perhaps).

    ***

    Why have banks allowed idle cash reserves to pile up on their balance sheets? Several reasons.
    For starters, the Fed now pays them a nominal rate of interest to hold these idle reserves. But this
    is not the main cause of soaring excess reserves. The principal reasons are lack of capital and lack
    of demand from borrowers who might be able to stay current on loans. The banking system has
    experienced sharp losses in the past year and is about to experience a second wave of losses.
    These losses deplete bank capital. Without adequate capital, the banking system cannot create
    new credit. At the same time that banks are strapped for capital, they also are strapped for loan customers who are judged creditworthy (see Chart 6).

  13. osidebuyer

    Pigpen I agree with you, and it’s been horrifyingly demonstrated here in socal that the general public will severely over extend themselves given the opportunity and encouragement.

    However you may take some consolation in the fact that my mortgage co. double and triple checked my debt, assets, and income before approving my loan (I closed in June ’09)

  14. sdbri

    Pigpen it’s true that 3% is analogous to the premium of a stock option that controls $300K, and it’s part of the problem. That said, FHA is essentially a form of PMI, which itself is an alternative to a second mortgage. You can still put 5% down without FHA any way you slice it.

    In finance, they say for every level of default under 100% there is always an appropriate interest rate to charge. The real problem has been they’ve been charging way too little.

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