Paper Economy - A US Real Estate Bubble Blog

Tuesday, April 27, 2010

S&P/Case-Shiller: February 2010

Today’s release of the S&P/Case-Shiller (CSI) home price indices for Fenruary 2010 (browse the dashboard) reported that the non-seasonally adjusted Composite-10 price index declined 0.64% since January further indicating that the government sponsored housing bounce seen last year continues to erode.

On a year-over-year basis though, the Composite-10 index now shows the first increase in 38 consecutive months, a notable development.

Looking at the 1990s-era comparison charts below you can see that it took roughly 2 times longer (roughly 40 months) for our current housing decline to show its first year-over-year gain than was seen during the 1990s decline.

If the 1990s remains a good model, this would imply that we have roughly another 40 months (3.3 years) left to go until we hit the ultimate price bottom.

Further, the 1990s decline took roughly 100 months (8.3 years) to go from peak to peak (i.e. peak to trough and back to full recovery again) so again, using the 1990s as a model would imply that our current decline will run a total of roughly 200 months (16.6 years) from peak to full recovery.

This means that current holders of peak priced homes may have to wait until some time in 2023 to be made whole again.

Alternatively, if we are currently experiencing the Japanese model for residential real estate deflation… the ultimate recovery may still be many decades out.

The 10-city composite index increased 1.43% as compared to February 2009 while the 20-city composite declined 0.64% over the same period.

Topping the list of regional peak decliners was Las Vegas at -55.96%, Phoenix at -51.58%, Miami at -47.48%, Detroit at -44.51% and Tampa at -42.65%.

Additionally, both of the broad composite indices show significant peak declines slumping -30.70% for the 10-city national index and -30.26% for the 20-city national index on a peak comparison basis.

To better visualize today’s results use Blytic.com to view the full release.

Also, follow the S&P/Case-Shiller dashboard.

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.

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 month-to-month 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.

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.

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