{"id":19284,"date":"2012-03-08T10:44:34","date_gmt":"2012-03-08T18:44:34","guid":{"rendered":"http:\/\/seattlebubble.com\/blog\/?p=19284"},"modified":"2012-03-08T10:44:34","modified_gmt":"2012-03-08T18:44:34","slug":"second-derivative-suggests-imminent-price-stabilization","status":"publish","type":"post","link":"https:\/\/seattlebubble.com\/blog\/2012\/03\/08\/second-derivative-suggests-imminent-price-stabilization\/","title":{"rendered":"Second Derivative Suggests Imminent Price Stabilization"},"content":{"rendered":"<p>At the risk of getting a little too technical and going off the <a href=\"http:\/\/en.wikipedia.org\/wiki\/Quantitative_analyst\" title=\"Wikipedia: Quantitative analyst\">quant<\/a> deep end, I wanted to explore a different view of the Case-Shiller home price data that I haven&#8217;t shared on here before.<\/p>\n<p>Typically when we look at the Case-Shiller home price data on here, we look at three things: The raw value (like change from peak, etc.), the year-over-year change, and to a lesser extent, the month-over-month change.  Something we talk about occasionally but have never actually charted is the rate of change in the year-over-year change&mdash;the second derivative.<\/p>\n<p>Here&#8217;s what that chart looks like:<\/p>\n<p style=\"margin: 5px auto; width: 600px; font-size: 0.8em; text-align: center;\"><a href=\"http:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2012\/03\/Case-Shiller-2nd-Derivative-annotated_2011-12.png\" title=\"Seattle Case-Shiller HPI 1st &#038; 2nd Derivatives\" rel=\"lightbox[19284]\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2012\/03\/Case-Shiller-2nd-Derivative-annotated_2011-12-600x435.png\" style=\"border: 0;\" title=\"Seattle Case-Shiller HPI 1st &#038; 2nd Derivatives - Click to enlarge\" alt=\"Seattle Case-Shiller HPI 1st &#038; 2nd Derivatives\" width=\"600\" height=\"435\" \/><\/a><\/p>\n<p>Personally, I find this chart to be quite fascinating.  I&#8217;ve annotated a few interesting dates of note:<\/p>\n<ul>\n<li><strong>March 2006:<\/strong> 2nd derivative passes into negative territory and stays there.<\/li>\n<li><strong>July 2007:<\/strong> Home prices peak (16 months after the 2nd derivative went negative).<\/li>\n<li><strong>January 2008:<\/strong> 1st derivative passes into negative territory (6 months after home prices peak).<\/li>\n<li><strong>August 2011:<\/strong> 2nd derivative passes into positive territory.<\/li>\n<\/ul>\n<p>If price movement were to follow roughly the same trend that we saw on the way down, this data would imply a bottom in home prices this coming December.<\/p>\n<p>I think it&#8217;s also worth noting that even <em>before<\/em> the tax credit was passed, the 2nd derivative had bottomed and had been heading back up for about a year.  I find it quite interesting to see just how much the tax credit distorted the steady recovery that was already underway, shooting the 2nd derivative through the roof, only to have it collapse again, overshooting the trend that had been established pre-credit.<\/p>\n<p>Before the bust, the 2nd derivative peaked in August 2005, nearly a full two years before home prices peaked.  The bottom in the 2nd derivative came in December 2008 (there&#8217;s a spike down that&#8217;s hard to see unless you <a href=\"http:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2012\/03\/Case-Shiller-2nd-Derivative-annotated_2011-12.png\" title=\"Seattle Case-Shiller HPI 1st &#038; 2nd Derivatives\" rel=\"lightbox[19284]\">enlarge the image<\/a>), but as I&#8217;ve mentioned before, the tax credit basically put real recovery on hold for its sixteen-month reign, so if we add two years plus sixteen months to the bottom in the 2nd derivative, we come up with a bottom for home prices right around the corner in April 2012.<\/p>\n<p>Obviously this is not a rigorous, in-depth, multi-factor economic analysis.  I&#8217;m not making any solid predictions based on this data, but I do think that the trends are pretty clearly heading in a direction that suggests price stabilization soon.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>At the risk of getting a little too technical and going off the quant deep end, I wanted to explore a different view of the Case-Shiller home price data that I haven&#8217;t shared on here before. Typically when we look at the Case-Shiller home price data on here, we look at three things: The raw&#8230;<\/p>\n","protected":false},"author":2,"featured_media":19288,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[8,616],"tags":[86,845,846],"coauthors":[],"class_list":["post-19284","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stats","category-counties","tag-case-shiller","tag-derivative","tag-quant"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.2 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Second Derivative Suggests Imminent Price Stabilization \u2022 Seattle Bubble<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/seattlebubble.com\/blog\/2012\/03\/08\/second-derivative-suggests-imminent-price-stabilization\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Second Derivative Suggests Imminent Price Stabilization \u2022 Seattle Bubble\" \/>\n<meta name=\"twitter:description\" content=\"At the risk of getting a little too technical and going off the quant deep end, I wanted to explore a different view of the Case-Shiller home price data that I haven&#8217;t shared on here before. Typically when we look at the Case-Shiller home price data on here, we look at three things: The raw...\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2012\/03\/Case-Shiller-2nd-Derivative-annotated_2011-12.png\" \/>\n<meta name=\"twitter:creator\" content=\"@The_Tim\" \/>\n<meta name=\"twitter:site\" content=\"@SeattleBubble\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"The Tim\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/2012\/03\/08\/second-derivative-suggests-imminent-price-stabilization\/\",\"url\":\"https:\/\/seattlebubble.com\/blog\/2012\/03\/08\/second-derivative-suggests-imminent-price-stabilization\/\",\"name\":\"Second Derivative Suggests Imminent Price Stabilization \u2022 Seattle Bubble\",\"isPartOf\":{\"@id\":\"https:\/\/seattlebubble.com\/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/seattlebubble.com\/blog\/2012\/03\/08\/second-derivative-suggests-imminent-price-stabilization\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/seattlebubble.com\/blog\/2012\/03\/08\/second-derivative-suggests-imminent-price-stabilization\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2012\/03\/Case-Shiller-2nd-Derivative-annotated_2011-12.png\",\"datePublished\":\"2012-03-08T18:44:34+00:00\",\"author\":{\"@id\":\"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/7de7c0dd14bee1a2c67f7ce86bc4505f\"},\"breadcrumb\":{\"@id\":\"https:\/\/seattlebubble.com\/blog\/2012\/03\/08\/second-derivative-suggests-imminent-price-stabilization\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/seattlebubble.com\/blog\/2012\/03\/08\/second-derivative-suggests-imminent-price-stabilization\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/2012\/03\/08\/second-derivative-suggests-imminent-price-stabilization\/#primaryimage\",\"url\":\"https:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2012\/03\/Case-Shiller-2nd-Derivative-annotated_2011-12.png\",\"contentUrl\":\"https:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2012\/03\/Case-Shiller-2nd-Derivative-annotated_2011-12.png\",\"width\":\"910\",\"height\":\"661\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/2012\/03\/08\/second-derivative-suggests-imminent-price-stabilization\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/seattlebubble.com\/blog\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Second Derivative Suggests Imminent Price Stabilization\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/#website\",\"url\":\"https:\/\/seattlebubble.com\/blog\/\",\"name\":\"Seattle Bubble\",\"description\":\"local\u00a0real\u00a0estate\u00a0news, statistics,\u00a0and\u00a0commentary without\u00a0the\u00a0sales\u00a0spin.\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/seattlebubble.com\/blog\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/7de7c0dd14bee1a2c67f7ce86bc4505f\",\"name\":\"The Tim\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/image\/37756956c11dcc50d2559761ffa5ee70\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/19e5770990a1681615608091b2de571b10c3e03bbac7d07bb2ae15297ee72fbc?s=96&d=retro&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/19e5770990a1681615608091b2de571b10c3e03bbac7d07bb2ae15297ee72fbc?s=96&d=retro&r=g\",\"caption\":\"The Tim\"},\"description\":\"Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer \/ internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.\",\"sameAs\":[\"http:\/\/SeattleBubble.com\/\",\"http:\/\/facebook.com\/is.totally.pointless\",\"https:\/\/x.com\/The_Tim\"],\"url\":\"https:\/\/seattlebubble.com\/blog\/author\/timothyellis\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Second Derivative Suggests Imminent Price Stabilization \u2022 Seattle Bubble","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/seattlebubble.com\/blog\/2012\/03\/08\/second-derivative-suggests-imminent-price-stabilization\/","twitter_card":"summary_large_image","twitter_title":"Second Derivative Suggests Imminent Price Stabilization \u2022 Seattle Bubble","twitter_description":"At the risk of getting a little too technical and going off the quant deep end, I wanted to explore a different view of the Case-Shiller home price data that I haven&#8217;t shared on here before. Typically when we look at the Case-Shiller home price data on here, we look at three things: The raw...","twitter_image":"https:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2012\/03\/Case-Shiller-2nd-Derivative-annotated_2011-12.png","twitter_creator":"@The_Tim","twitter_site":"@SeattleBubble","twitter_misc":{"Written by":"The Tim","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/seattlebubble.com\/blog\/2012\/03\/08\/second-derivative-suggests-imminent-price-stabilization\/","url":"https:\/\/seattlebubble.com\/blog\/2012\/03\/08\/second-derivative-suggests-imminent-price-stabilization\/","name":"Second Derivative Suggests Imminent Price Stabilization \u2022 Seattle Bubble","isPartOf":{"@id":"https:\/\/seattlebubble.com\/blog\/#website"},"primaryImageOfPage":{"@id":"https:\/\/seattlebubble.com\/blog\/2012\/03\/08\/second-derivative-suggests-imminent-price-stabilization\/#primaryimage"},"image":{"@id":"https:\/\/seattlebubble.com\/blog\/2012\/03\/08\/second-derivative-suggests-imminent-price-stabilization\/#primaryimage"},"thumbnailUrl":"https:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2012\/03\/Case-Shiller-2nd-Derivative-annotated_2011-12.png","datePublished":"2012-03-08T18:44:34+00:00","author":{"@id":"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/7de7c0dd14bee1a2c67f7ce86bc4505f"},"breadcrumb":{"@id":"https:\/\/seattlebubble.com\/blog\/2012\/03\/08\/second-derivative-suggests-imminent-price-stabilization\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/seattlebubble.com\/blog\/2012\/03\/08\/second-derivative-suggests-imminent-price-stabilization\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/seattlebubble.com\/blog\/2012\/03\/08\/second-derivative-suggests-imminent-price-stabilization\/#primaryimage","url":"https:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2012\/03\/Case-Shiller-2nd-Derivative-annotated_2011-12.png","contentUrl":"https:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2012\/03\/Case-Shiller-2nd-Derivative-annotated_2011-12.png","width":"910","height":"661"},{"@type":"BreadcrumbList","@id":"https:\/\/seattlebubble.com\/blog\/2012\/03\/08\/second-derivative-suggests-imminent-price-stabilization\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/seattlebubble.com\/blog\/"},{"@type":"ListItem","position":2,"name":"Second Derivative Suggests Imminent Price Stabilization"}]},{"@type":"WebSite","@id":"https:\/\/seattlebubble.com\/blog\/#website","url":"https:\/\/seattlebubble.com\/blog\/","name":"Seattle Bubble","description":"local\u00a0real\u00a0estate\u00a0news, statistics,\u00a0and\u00a0commentary without\u00a0the\u00a0sales\u00a0spin.","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/seattlebubble.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/7de7c0dd14bee1a2c67f7ce86bc4505f","name":"The Tim","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/image\/37756956c11dcc50d2559761ffa5ee70","url":"https:\/\/secure.gravatar.com\/avatar\/19e5770990a1681615608091b2de571b10c3e03bbac7d07bb2ae15297ee72fbc?s=96&d=retro&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/19e5770990a1681615608091b2de571b10c3e03bbac7d07bb2ae15297ee72fbc?s=96&d=retro&r=g","caption":"The Tim"},"description":"Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer \/ internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.","sameAs":["http:\/\/SeattleBubble.com\/","http:\/\/facebook.com\/is.totally.pointless","https:\/\/x.com\/The_Tim"],"url":"https:\/\/seattlebubble.com\/blog\/author\/timothyellis\/"}]}},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2012\/03\/Case-Shiller-2nd-Derivative-annotated_2011-12.png","jetpack_shortlink":"https:\/\/wp.me\/p6wh0F-512","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/posts\/19284","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/comments?post=19284"}],"version-history":[{"count":0,"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/posts\/19284\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/media\/19288"}],"wp:attachment":[{"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/media?parent=19284"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/categories?post=19284"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/tags?post=19284"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/coauthors?post=19284"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}