Monday, January 10, 2011

Radar Watching: November 2010

As I have noted in the past, since the home price index data provided by Radar Logic is more timely, unadjusted and un-smoothed it is particularly useful for gaining deeper visibility over our housing markets especially in light of the distortions created by the massive government tax gimmick and other malfeasance.

By contrast, recognize that because the S&P/Case-Shiller (CSI) data is a two month lagged and a three month moving average, the index data will reflect price movement resulting from the government's housing tax scam (as BostonBubble pointed out) until at least the February 2011 release.

The Radar logic data, on the other hand, while lagged by 60 days is reported daily and, more importantly, is NOT SMOOTHED or adjusted so you can expect to see the underlying trends more precisely and substantially sooner than with the CSI.

As for the latest trends, it’s important to note that the 25-MSA Composite is continuing to show significant year-over-year declines and a slumping direction that appears bound to wipe-out the low value reached in March of 2009 prior to the government's massive housing boondoggle.

The latest data shows that as of the middle of early November, prices are 2.27% below the level seen in November 2009.

Further, while prices have flattened out in recent months, Quinn Eddins, Director of Research at Radar Logic, suggests that this trend should not be viewed as a sign of stability.

"The absence of volatility in home prices during October should not be interpreted as a sign of stability to come, ... Housing markets continue to face serious headwinds in the form of widespread negative equity, high rates of foreclosure and swelling inventories of bank-owned properties. Even if job creation bolsters housing demand in the 2011, I anticipate that demand will fall short of the burgeoning supply homes for sale, and prices will fall further by the end of the year."