Thursday, December 31, 2009

S&P/Case-Shiller: October 2009 report

The S&P/Case-Shiller Home Price Indices report for October 2009 was released a few days ago. The report shows "that the annual rate of decline of the 10-City and 20-City Composites improved compared to last month’s reading."

“The turn-around in home prices seen in the Spring and Summer has faded with only seven of the 20 cities seeing month-to-month gains, although all 20 continue to show improvements on a year-over-year basis. All in all, this report should be described as flat.” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “Coming after a series of solid gains, these data are likely to spark worries that home prices are about to take a second dip. Before jumping to conclusions, recognize that the one time that happened at the beginning of the 1980s, Fed policy saw dramatic reversals, which is very different from the stable and consistent Fed policy we have today. "

"...As of October 2009, average home prices across the United States are at similar levels to where they were in the autumn of 2003."

Of note for the DC area is that sales prices declined in October compared to September, the first month/month decline since March. Moreover, the rate of month/month price increases peaked in June and the slope of price increases turned negative. While we may bemoan the negative turn of events, homeowners should consider ourselves lucky compared to Las Vegas: prices there have declined for 38 straight months and are now about 5% higher than those of January 2000. Talk about a lost decade!

On another note, this is my 90th - and last - post for 2009. I hope you've found this blog to be informative and helpful, if not entertaining [who else in the blogosphere talks about Bagatelle-brunching-bonus-bagging-too busy-to-meet-with-the-President-who-saved-our-asses Wall Street idiots?]. I'd like to wish each of you a safe and prosperous 2010!

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




Tuesday, December 29, 2009

Schadenfreude

God love 'em, the WaPo made my day yesterday. Paul Schwartzman's article, "D.C. housing market's collapse lessens developers' swagger" describes the fall of the once mighty condo developer. The article's full of little nuggets from these former kings of the hill:

  • "The mood is a mood of humility and contriteness and self-reflection. There were a lot of people who were intoxicated by the times and the easy access to capital. A lot of them are gone."
  • "But we were just doing our job, taking on high-profile projects. I don't feel we were put in our place. We made some bad investments that didn't pan out. We lost money."
  • "You had a constant flow of money -- big money -- coming in... The idea was to make as much as possible and enjoy yourself."
  • "Of course, we got greedy... Everyone was greedy; we were aiming high... We're learning humility the hard way."
  • Developers remain adamant that they served Washington well, building wealth and reviving neighborhoods, even as they drove up prices and made some areas less affordable.
  • "We did wonderful things for the city... If the neighborhood's no longer completely down in the dumps, I also know it's harder to afford. It's an inevitable part of what we do. On a net basis, it was good for the city."

I don't know how to thank these guys for ratcheting up prices in the District so that you can't buy anything for less than $200,000. All those folks who bought condos in buildings like the Axis are thrilled to see their condos lose 20% of their value. And I'm sure all those folks who can no longer afford to live in the District are pleased, too. Might I add, as a taxpayer I'm simply delighted to bail out banks who lent money to these guys only to see their projects [and loans] go bust. Thankfully, none of the developers said they were doing God's work.

As I read this article, I concocted a fantasy where a few formerly-powerful, formerly-wealthy Bagatelle-brunching-bonus-bagging-too busy-to-meet-with-the-President-who-saved-our-asses Wall Street idiots confessed to the errors of their ways, as did these developers. I wonder if James Cameron would take a pitch for that movie as a sequel to "Avatar"? I've already got a title: "Avarice".

Saturday, December 19, 2009

MRIS November 2009 Housing Report

One dry, snow free day last week, MRIS released its data for November signed sales contracts for existing home and condos in the District. As in the reports for the preceding few months, sales and dollar volume are waaaaaaay up and prices are lower than the same period last year. More is selling, but for less. I must re-repeat: remember that we're now into the one year anniversary of the financial collapse kindly brought to us by the Bagatelle-brunching-bonus-bagging idiots who work on Wall Street so YoY numbers right now (sales and dollar volume) reflect the effects of last year's near economic meltdown.

Key points in November's data:

  • YoY, November was simply a blowout month. Aggregate dollar volume leapt 83.46%. The number of units sold almost doubled, up 98.08%.
  • Condo dollar volume more than doubled, hurtling 109.85%. Home dollar volume was respectable, too, surging 70.2%.
  • Condo sales volume was full or vim and vigor, too, bounding 118.25%. Home sales volume was no slouch, popping tall at 82.39%.
  • However, prices continued their downward spiral. Average prices fell 7.38%. Condo prices fell 3.85%, while home prices stumbled 6.68%. Only 4 bedroom homes experienced an increase in average sales price YoY, up 3.93%.

One thing that struck me is that the market doesn't seem to be behaving in a textbook manner. Eevery month since May there's been a 5-6 months supply of housing inventory listed and in November it shrunk even more to 4.44 months for condos and 5.15 months for months. Both metrics indicate a tightening supply of housing on the market. Yet prices still fall across the board, condos and homes. High demand and less supply don't normally equate to lower prices. So what's going on?

Detailed Data

Average Sales Price


Dollar Volume

Transaction Volume

Monday, December 14, 2009

MRIS November 2009 Sales Report: Preliminary data

MRIS released November's data for sales of existing homes in the District last Thursday. Prices continue to fall while more units are sold. Key points [YoY]:

  • Dollar volume boomed 83.46%
  • Average price is down 7.38%, median is down 6.43%
  • Unit sales volume [aggregate] is up a whopping 98.08%
  • Home unit sales up 82.39%
  • Condo unit sales up 118.24%

Sales prices were 92.64% of list. At November's sales pace, there is a 4.44 month supply of condos [a decrease from October] and 5.15 month supply of homes listed for sale [slightly less than October].

Before anyone starts popping the champagne bottle and getting their real estate license, remember that this data reflect the effects of the economic crisis brought upon us by Wall Street's Bagatelle-brunching-bonus-bagging idiots, the same idiots who, having tossed the global economy over the cliff only to be rescued from permanent unemployment by the US taxpayer, now somehow think they're the masters of the universe "doing God's work."

Analysis forthcoming.