Today’s release of the S&P/Case-Shiller home price indices for March 2009
again confirms the washout conditions seen in the nation’s housing markets with ALL of the 20 metro areas tracked reporting significant year-over-year declines and ALL metro areas showing large and even shocking declines from their respective peaks.
Further, March brought a slight seasonal deceleration of the month-to-month price slide with the 10-city index dropping 2.06% and the 20-city index dropping 2.17% since February.
Even a cursory glance at the charts below should result in the firm understanding that what we are experiencing today is unprecedented.
Thirty three months into the decline and the bottom to the home price slide is nowhere in sight.
The most optimistic argument one could make at the moment is that the pace of the decline is currently slower than it was a few months ago.
That should come as little comfort though considering that this decline will more than likely continue for another two to three years.
It’s important to consider that the 90s housing bust took roughly 50 months to reach the bottom in prices but as you can see from the charts below, our current housing bust literally dwarfs the 90s era tumult.
Further, the 90s housing recovery played out against the backdrop of a truly unique period of growth in the wider economy fueled primarily by novel and ubiquitous technological change (cell phones, internet, personal computers, telecommunications, etc).
In all likelihood, our current decline will play out at least as long as the 90s era (more than likely far longer) with a full recovery measured not in years but in decades.
The 10-city composite index declined 18.65% as compared to March 2008 far firmly placing the current decline in uncharted territory in terms of relative intensity.
Topping the list of regional peak decliners were Phoenix at -53.03%, Las Vegas at -50.40%
, Miami at -47.00%, San Francisco at -46.07%, Detroit at -44.13%, San Diego at -42.25%, Los Angeles at -41.27%, Tampa at -40.62%, Washington DC at -33.88%, Minneapolis at -36.23%, Chicago at -27.44%, Seattle at -22.50%, Cleveland at -21.56% and Boston at -20.07%.
Additionally, both of the broad composite indices showed significant declines slumping -33.09% for the 10-city national index and 32.21% for the 20-city national index on a peak comparison basis.
To better visualize the results use the PaperEconomy S&P/Case-Shiller/Futures Charting Tool
as well as the PaperEconomy Home Value Calculator
and be sure to read the Tutorial
in order to best understand how best to utilize the tool.
The following chart (click for larger version) shows the percent change to single family home prices given by the Case-Shiller Indices as compared to each metros respective price peak set between 2005 and 2007.
The following chart (click for larger version) shows the percent change to single family home prices given by the Case-Shiller Indices as on a year-over-year basis.
Additionally, in order to add some historical context to the perspective, I updated my “then and now” CSI charts that compare our current circumstances to the data seen during 90s housing decline.
To create the following annual charts I simply aligned the CSI data from the last month of positive year-over-year gains for both the current decline and the 90s housing bust and plotted the data with side-by-side columns (click for larger version).
What’s most interesting about this particular comparison is that it highlights both how young the current housing decline is and clearly shows that the latest bust has surpassed the prior bust in terms of intensity.
Looking at the actual index values normalized and compared from the respective peaks, you can see that we are still likely less than half of the way through the portion of the decline in which will be seen fairly significant annual declines (click the following chart for larger version).
The “peak” chart compares the percentage change, comparing monthly CSI values to the peak value seen just prior to the first declining month all the way through the downturn and the full recovery of home prices.
In this way, this chart captures ALL months of the downturn from the peak to trough to peak again.
As you can see the last downturn lasted 97 months (over 8 years) peak to peak including roughly 43 months of annual price declines during the heart of the downturn.
Notice that peak declines have been FAR more significant to date and, keeping in mind that our current run-up was many times more magnificent than the 80s-90s run-up, it is not inconceivable that current decline will run deeper and last longer.
Labels: case-shiller, economy crisis, economy recession, housing bubble, housing bust