It’s time once again for our monthly update to the Case-Shiller Home Price Index. According to November data,
Down 2.5% October to November.
Down 11.2% YOY.
Down 13.6% from the July 2007 peak
Last year prices fell 1.4% from October to November and year-over-year prices were up 1.8%.
Here’s the usual graph, with L.A. & San Diego offset from Seattle & Portland by 17 months. After outperforming Seattle for 11 months, Portland finally turned in a larger YOY drop in November. It is definitely also worth noting that the YOY declines appear to be turning a corner in SoCal, with price drops coming in slightly less negative than the previous month.
Note: This graph is not intended to be predictive. It is for entertainment purposes only.
Here’s the graph of all twenty Case-Shiller-tracked cities:
In November, six of the twenty Case-Shiller-tracked cities experienced smaller year-over-year drops than Seattle (one fewer than in October). Dallas at -3.3%, Denver at -4.3%, Cleveland at -5.2, Charlotte at -5.3%, Boston at -7.4%, and New York at -8.4%. Phoenix took the largest year-over-year drop yet again, with prices falling just short of 33% in a single year.
Here’s an update to the peak-decline graph, inspired by a graph created by reader CrystalBall. This chart takes the twelve cities whose peak index was greater than 175, and tracks how far they have fallen so far from their peak. The horizontal axis shows the total number of months since each individual city peaked.
In the fifteen months since the price peak in Seattle prices have declined approximately 13.6%. Surprisingly, Seattle’s decline has tracked fairly closely to the pattern of price drops in Phoenix for a good seven months now. Eventually this is likely to moderate, unless the local economic news continues to get exceedingly worse.
Here’s the “rewind” chart. The horizontal range is selected to go back just far enough to find the last time that Seattle’s HPI was as low as it is now. This gives us a clean visual of just how far back prices have retreated in terms of months.
Seattle’s Case-Shiller value for November 2008 of 166.23 came in just above its January 2006 value of 165.49. Prices have now “rewound” just one month shy of a full three years.
Check back tomorrow for a post on the Case-Shiller data for Seattle’s price tiers.
(Home Price Indices, Standard & Poor’s, 01.27.2009)
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Ouch. That hurts. I wonder if any machinists lost their jobs?
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The “offset” chart is just amazing…. I remember in the summer of 2007 looking at that chart and thinking Tim was a bit off on his theory, and a year and a half later the chart is spot on.
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2009 will be brutal. No doubt.
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So the latest news of the stimulus is $335 million for STD education. Most of the so called stimulus is a random grab bag of giveaways that will create massive entrenched interest groups that will scream bloody murder if they try to not renew those in coming years. The first half of the TARP is mostly sitting in bank vaults keeping banks from going under. That can easily be undone. The second half of TARP hasn’t gone out yet, and who knows what that will be spent on. But the stimulus bill is going to create a massive army of entitled people who, when they are not teaching violent love-ed, will go straight to the malls and realtors’ offices to start spending their money. Zero new production and lots of easy money. How is that not inflationary?
Yes as prices on houses continue to fall, that is destroying money. However, in the past 6 months, housing inventory has dropped by 1 million units. When another 1,000,000 houses are taken off the market by the $800B stimulus, house price will no longer be falling, and we will have enormous deficits and lots of people demanding these spending programs continue. The result will be years of massive deficits funded by printing of treasury bills.
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Just as another perspective on the job cuts affecting Seattle home sales..
My wife and I are currently living in San Francisco, saving aggressively for a down payment on a home. The plan was to stay in our rent-controlled apartment for a couple years, sock away money, and then move back to Seattle and buy a place.
But, part of that assumption was that I’d be able to get my old job back with Microsoft (and yes, I actually liked working there.)
The original plan was to move back to Seattle sometime in late 2009, but now that looks far less likely. Our savings isn’t the problem (knock on wood), but I need to be able to find a good job to make the move feasible.
No job, no move. No move, no home purchase. Just one story, I know… just throwing it out there.
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Biggest lie about the stimulus? It looks like less than 10% of the money is for real infrastructure items and rebuilding. The majority is a cornucopia of social program pork and subsidies.
But the related debt is very real, and will be with us for a generation … or two… or three…
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The money won’t be easy, because the deficit will force interest rates higher and people still won’t be able to buy a house for less than they can rent it for.
The money won’t be easy, because taxes and fees will have to be increased to pay the higher interest on the increasing federal and state debt.
The money won’t be easy, because higher unemployment will suppress wage increases and benefits.
All of the above will lead only to less freedom, less security, and less lifestyle.
Email or call your senators/congressman and tell them to vote NO!
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I KNOW WHAT YOU MEAN ANGIE
Assuming our tax laws are unchanged year to year is a good bet, but not a for sure….best check the 2008 1040 book [it keeps getting thicker every year] for today’s or last years info.
Keeping a box of receipts is a good idea now matter what, you never know what our wiley government has in store for us in bailout tax increases, any of us too, irrespective of incomes.
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10,000 BOEING LAYOFFS ANNOUNCED TODAY
Is this on top of the 4500? I hear the 7X7 is getting order cancellations today too, just as Seattle Bubble predicted.
We need more lower paid H-1Bs to rid ourselves of Seattle’s vanishing Middle Class….lol…..
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I am not so sure. US deficits have been increasing for almost a decade yet the continued growing demand for (the ever more plentiful) treasuries has kept driving interest rates lower. Look at Japan. Their deficits have kept rising consistently for 20 years, yet Japanese interest rates are at all time lows.
We could wind up with a situation where interest rates are incredibly low, but the economy still tanks, with job losses and asset price declines.
I have spelled out how this can happen in my podcast on deflation. http://www.surkan.com
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Scotsman who said that buying a home was EVER cheaper then renting?
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I see your 5500 and raise to 10000?
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So is “social program pork” better or worse than the even more costly “wall street pork” or “military pork” we’ve been handing out for the past eight years?
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Japan is dying- in part because they do have more debt than us, 160% of GNP verses 80% for the USA. Here are the growth rates by decade for Japan:
’60s…. 10%
’70s…. 5
’80s…. 4
’90s…. 1.5
’00s…. -2 All adjusted for inflation
Once the bottom is thought to be in, the money in treasuries will leave them for hard assets as an inflation hedge, even if the inflation doesn’t materialize. Japan has been able to finance its deficit at essentially zero interest during its recent deflationary past. Eventually the deflation will end, and interest rates will ramp up to the more traditional levels of 3-4%. With a national debt of over 1.5 times its GNP, what do you think happens when interest goes from zero to even 2%? What happens to the government and its budget?
Japan goes “BOOM.” Do we want the same result?
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During inflationary times buying can easily be cheaper than renting as the home (asset) appreciation significantly mitigates, and in some cases can even erase, the monthly cash cost of ownership. Even J6P figured this out during the last decade. What he didn’t figure out was that it couldn’t go on forever. ;-)
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I’ve been looking wistfully at Hawaii rents, which in one area I like are half what they are here. When people are out of work and willing to take lower pay, they may move more readily. Add that to the mix of prediction criteria.
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Update- IMF 2009 predictions:
Eurozone -2.0%
U.S -1.6%
Japan -2.6%
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[...] Gardner Forecast: Prices 0 to -5% Case-Shiller: -11.2% (Nov.) King Co. SFH: [...]
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