The November 2011 Case-Shiller Index was released today.
Here is the San Diego seasonally-adjusted CSI, compared to two other indicators:
| Month | No. of SD Detached Sales | Average $/sf | SD Case-Shiller SA |
| Nov. 2010 | |||
| Oct. 2011 | |||
| Nov. 2011 | |||
| Y-O-Y Chg. |
It looks encouraging to me. Both of the markers on pricing are acceptable, rates are at all-time lows, and the leading indicator, number of sales, is on the rise.
But the negative soundbites will discourage consumer confidence, thwarting any euphoria building among homebuyers – who, as a result, will be reluctant to pay more than the comps. Sellers who can live with a reasonable price will have no trouble finding a buyer during the next few months.
The price trend is still downward.
The second derivative of price does appear to be positive at least for now.
Too bad they don’t release the numbers before subtracting the flips. They should present it both ways. I believe the “flip filter” results in
a significant downward bias to the index.
In low end areas, flips are large part of the volume. And they aren’t being incorporated properly into the index.
They are count the flip purchase, which is a downward datapoint, but they toss the flip sale, which would be a positive datapoint.
Counting only the negative datapoints, where a price goes down, and discounting the positive datapoint showing a price increase due to improving the house, skews this index. Would be nice to know how much this skews it.
Jakob,
Including the flip sales would skew the index positively, since there would be no accounting for the improvements made by the flipper.
Improvements are a normal part of any market as well as deferred maintenance which these flips need. Flip or no flip, homes are being improved and maintained. It should be included in the data. When you are buying a home, maintenance and improvement cost paid before you buy are part of the real estate landscape you are looking at so it should be in the index. Also, how would you account for improvements made by longer term owners? You can’t easily. They are being too smart by half. Just show us the data.
If you don’t like the fact that C-S filters the data just use the average price per square ft, or median price per sqft. You could certainly then group that into market segments such as high/med/low priced home or zip code related, but I don’t think the picture changes all that much. To be honest I don’t know that C-S includes the initial purchase off the count house steps either, which if included would skew prices down.
Pretty much any reasonable measure you chose to use shows house prices moving down somewhat YoY. We should see some kind of spring bounce, so maybe the picture changes somewhat.
The bottom line is we’ve been drifting lower (at the county level) since the tax credit was removed from the market and that probably has a lot to do with slightly less leverage being available. $8000/0.035 <- FHA minimum down = $228K of leverage. That free $8K up front put a lot more leverage in people's hands.
SD prices are still too high. You need to look at the longer term graph to see that prices are still relatively high. We should see at least another 10-25% drop before they are adjusted correctly. The faster we get there, the better for SD, for California, & for the US.
Phil Mickelson’s 9,500-square-foot home is on the market for $7 million
http://sports.yahoo.com/blogs/golf-devil-ball-golf/phil-mickelson-9-500-square-foot-home-market-155901556.html
I think the same thing I thought a few years ago. If you find a house that is truly, uniquely suited to you and you can afford the price, then you buy it and don’t worry about whether it’s going to lose resale value, same as a car or a bigscreen TV. But if every house you look at is stamped from the same cookie cutter pattern and doesn’t come with a killer ocean view or the horse acreage you always wanted, what’s the rush?
Yes, Lefty has had a tough journey down too. He started in 2007 at $15 million.
Paid $5.95 in 2001.
Gene,
Rates.
Regards, JtR
Jim,
Sharp.
Best, CF
JTR & CF
Right, the dollars have been printed and sent out into the world, when they come home to roost rates will rise and so will property prices. Its called inflation and its coming is gauranteed by the Feds actions since 2008.
Andrewa, it is exactly the opposite.
when rates go up – which may not happen for years(at least a major move to normalcy)- prices will come down. it has a reverse effect.
look at it like this is:
If the SD market is still going down slowly/bottoming or getting ready for the next major leg down and rates are at unbelievable historic lows- what does that tell you?
imagine if the rates were at a normal -non fed coerced-6-7% right now. Prices would fall substantially as buyers ability to qualify and afford the current pricing would be reduced significantly.