Case-Shiller Decline is steep this month

[Elliott]

Just when you thought things couldn't get worse (more thumb
twidling time)....I wonder if Z2055 are making time adjustments yet?

(WSJ)The S&P/Case-Shiller home-price indexes, a closely watched gauge of U.S. home prices, show price declines continued to get steeper in April, with prices in every region surveyed now showing year-over-year drops.

Las Vegas and Miami were again the weakest markets over the past year, posting 26.8% and 26.7% drops, respectively. Las Vegas and Miami were the weakest markets each of the other months this year. S&P noted that the two markets saw some of the fastest growth in the 2004/2005 periods, with annual growth rates surging above 53% and 32%, respectively.

Miami and Phoenix were the worst performers month-to-month, each with negative returns in excess of 3%.

 

[Bama Bayou]

I really don't understand why so much attention is paid to Case-Shiller. They are smart guys, but their model, IMNSHO, sucks.

First of all, they use resales of the same property. This sounds good in theory since it's the same apple (or orange), but it puts too much emphasis on flippers. This made the numbers artificially high during the boom and artificially low now.

Second of all, look at the markets they cover. 20 large cities concentrated in CA and FL with Phoenix and Vegas thrown in for good measure. They are using the most volatile of the bubble cities in the country.

 

[Randolph Kinney]

I really don't understand why so much attention is paid to Case-Shiller. They are smart guys, but their model, IMNSHO, sucks.

First of all, they use resales of the same property. This sounds good in theory since it's the same apple (or orange), but it puts too much emphasis on flippers. This made the numbers artificially high during the boom and artificially low now.

Second of all, look at the markets they cover. 20 large cities concentrated in CA and FL with Phoenix and Vegas thrown in for good measure. They are using the most volatile of the bubble cities in the country.

I suppose you prefer NAR data?

 

[Elliott]

Yeah, but its been around forever. Its a little sensitive, but
more atuned to the market than BLS's. I guess we could all
rely on Zaio's adjustment for time...oh that's right, they aren't
live yet.

Bama,
I just noticed your from Alabama, so you could probably use
tree rings or measure moss change, maybe bumps on football
players heads.

 

[Mr Rex]

Too small of a pool to be statistically significant and representative of the US market except when market conditions nationwide are balanced and stable. But they have a good thing going, no need to point out the chinks in their armor.

 

[Bama Bayou]

Yeah, but its been around forever. Its a little sensitive, but
more atuned to the market than BLS's. I guess we could all
rely on Zaio's adjustment for time...oh that's right, they aren't
live yet.

Bama,
I just noticed your from Alabama, so you could probably use
tree rings or measure moss change, maybe bumps on football
players heads.

Funny. Ha. Ha.

I use data from my own market and do it myself. The closest city to me that CS uses is Atlanta, about a six hour drive. They are just not relevant to my market.

The NAR data would be useful if they didn't change their methodology all the time. Their economist is really bad news, poor guy, been wrong for the last three years. Way wrong.

 

[Elliott]

On the other hand (sound like an economist don't I?), I was watching
ABC World News. They had a story about Case-Shiller, but said,
RE sales are up in those markets by 20% (bargin hunters?). And the
high price of oil/transportation means a cargo container that once
cost $3K, now costs $8K, so the furniture maker in NC is making
furniture again. Then they cited other increases in US factories
because of increase transportation costs, including steel. We live in
interesting times.

 

[Bama Bayou]

Those markets went up 20% on a month to month basis, not year to year. It is probably a combination of bargin hunters and seasonal house shopping.

I live close to Mobile and the port is very busy these days due to the falling dollar. A 4 billion $ steel mill is also under construction.

 

[Bama Bayou]

Don't get me wrong, Case and Shiller are very smart guys who model real estate in about 1000 different ways. I just don't like that index. The theory is good but the results have little to do with reality, especially from a national standpoint.

 

[farmguy]

You are right on Bama. I try to follow as much news as I can. There is a blog called Calculated Risk that is very good. Most of the national data is skewed by Cal, Fl, Nev, and a couple of rust belt states. But that is all they report.
Most of the simple folks that live in tree ring counting states never caught on that you were supposed to make a living sipping wine and taking out home equity loans. Of course many of those markets with the simple folks are still doing ok.