Tuesday, July 28, 2009

S&P/Case-Shiller: May 2009 report

The S&P/Case-Shiller Home Price Indices report for May 2009 was released today. The report says "although still negative, the annual rate of decline of the 10-City and 20-City Composites improved for the fourth consecutive month in 2009." Left unsaid [again] was that some of the lowest mortgage rates on record were available in April, rates that have increased since.

“The pace of descent in home price values appears to be slowing” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “There is a clear inflection point in the year-over-year data, due to four consecutive months of improved rates of return, after the steep decline that began in the fall of 2005. In addition to the 10-City and 20-City Composites, 17 of the 20 metro areas also saw improvement in their annual returns compared to those of April. Looking at the monthly data, 13 of the 20 metro areas reported positive returns; and the 10-City and 20-City Composites reported positive returns for the first time since the summer of 2006. To put it in perspective, these are the first time we have seen broad increases in home prices in 34 months. This could be an indication that home price declines are finally stabilizing”.

“While many indicators are showing signs of life in the U.S. housing market, we should remember that on a year-over-year basis home prices are still down about 17% on average across all metro areas, so we likely do have a way to go before we see sustained home price appreciation.” Mr. Blitzer added.”

While the media seems to be breaking out the champagne, let's not forget, as pointed out here, that "prices are still high relative to incomes and rents." Homes in the DC area are still about 61% more expensive than May 2000. YoY, DC area prices fell 14.93% and, from April to May, prices increased 1.31%. The DC area's home price index is close to that of February 2004.

The charts below reflect home price data for the Washington, DC MSA.



4 comments:

Brandon Green said...

Excellent reminder Keith about keeping those stats in perspective.

Ivan said...

Calculated Risk had a good post recently regarding the double bottom - first new homes and starts and THEN the prices.

Given media consensus that every area is experiencing the bubble deflating on its own schedule, I was wondering if you've been monitoring these for the DC area. Great work btw.

Anonymous said...

Thank you for your wonderful blog; the analysis is invaluable.

As someone thinking of jumping into DC's volatile condo market, I was thinking about something I read recently: nationally, home prices appear to be stabilizing as banks (perhaps only temporarily) ease up on foreclosures.

But it appears likely that foreclosures will return, which will likely drag prices down again. http://blogs.tnr.com/tnr/blogs/the_stash/archive/2009/07/29/it-s-the-foreclosures-stupid.aspx What do you think of this thesis?

Anonymous said...

"Ivan said...
Calculated Risk had a good post recently regarding the double bottom - first new homes and starts and THEN the prices.

Given media consensus that every area is experiencing the bubble deflating on its own schedule, I was wondering if you've been monitoring these for the DC area. Great work btw."

I have. The bottom in sales was sometime round last march (exurbs) to october (inner areas) - so weve hit both those marks. I expect to see the same thing in price increases - starting in the exurbs and then moving across in that 6 month timeperiod.