U.K. Home Prices: Halifax and Nationwide April 2011

The latest release of the two most prominent home price indices for the United Kingdom are continuing to signal sluggishness mixed with a slight lift coming in recent months.

The “Nationwide” series, indicated that U.K. home prices increased 0.52% from March but falling 1.30% below the level seen in April 2010 while the “Halifax” series remained flat from March and fell a notable 4.97% below the level seen a year earlier.

Both indices are similar to our own S&P/Case-Shiller data series in that they both implement a methodology that seeks to standardize the quality homes included as source data and track the price changes occurring between sales instead of simply tracking the distorted average or median sales price.

The following chart (click for full-screen dynamic chart) show the price movement since 1991 to each index.

S&P/Case-Shiller: August 2009

Today’s release of the S&P/Case-Shiller (CSI) home price indices for August 2009 showed a continued, yet notably weaker, bounce in prices with the Composite-10 index increasing 1.28% on a month-to-month basis.

While many of the nation’s housing markets experienced extra-seasonal activity as the result of the “first time homebuyers” tax gimmick, its effects, along with the typical seasonal bounce, are beginning to wane.

It’s important to remember that the CSI data is lagged by two months and that today’s results represent an average of prices paid from home sales closed between June-August.

Now that the strongest selling months have largely been reported, look for all remaining CSI releases for 2009 to indicate notable price weakness coming from typical seasonal declines as well as extra-seasonal declines as a result of notably reduced demand from activity that was “stimulated” forward into the summer by the tax sham.

Also, looking at the 1990s-era comparison charts below its obvious that even after the main downward thrust has been reached, the housing markets have a long tough slog ahead with the ultimate bottom likely many years out…. Or if we are currently experiencing the Japanese model… decades out.

Further, is important to remember that 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).

The 10-city composite index declined 10.63% as compared to August 2008 while the 20-city composite declined 11.32% over the same period.

Topping the list of regional peak decliners was Las Vegas at -54.95%, Phoenix at -52.33%, Miami at -46.98%, Detroit at -43.65% and Tampa at -39.76%.

Additionally, both of the broad composite indices showed significant declines slumping -30.21% for the 10-city national index and -29.30% for the 20-city national index on a peak comparison basis.

To better visualize today’s results use Blytic.com and search for “case shiller”.

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.

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.

S&P/Case-Shiller: March 2009

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.

Bull Trip!: GDP Report Q1 2009 (Advance)

Today, the Bureau of Economic Analysis (BEA) released their first installment of the Q1 2009 GDP report showing a striking contraction with GDP declining at an annual rate of -6.1%.

Easily the most notable features of today’s report are the stunning declines to residential and non-residential as well as exports of both goods and services.

Fixed investment provided significant drags on growth with non-residential investment declining a whopping -37.9% and residential investment plunging -38.0% while net exports of goods and services declined -30.0%.

Making a positive contribution to GDP were equally stunning declines to imports of goods and services slumping -34.1% as well as positive personal consumption expenditures increasing 2.2%.

The following chart shows real residential and non-residential fixed investment versus overall GDP since Q1 2003 (click for larger version).

S&P/Case-Shiller: February 2009

Today’s release of the S&P/Case-Shiller home price indices for February 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, February brought a slight seasonal deceleration of the month-to-month price slide with the 10-city index dropping 2.08% and the 20-city index dropping 2.17% since January.

In all likelihood, we are now firmly sliding down an even more momentous slope of home price declines as the continued economic crisis and dramatically accelerating unemployment work to both crush consumer sentiment and force panicked mortgage lenders to continue to tighten their lending standards.

As the housing decline enters the year of the “Prime-Bomb” a larger and much more damaging population of homeowners will face historic levels of financial stress the outcome of which is, at the moment, very hard to calculate.

The 10-city composite index declined 18.84% as compared to February 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 -50.80%, Las Vegas at -48.44%, Miami at -45.07%, San Francisco at -44.87%, San Diego at -41.35%, Detroit at -41.28%, Los Angeles at -40.44%, Tampa at -38.99%, Washington DC at -33.08%, Minneapolis at -31.98%, Chicago at -25.09%, Seattle at -20.89%, Cleveland at -20.84% and Boston at -18.46%.

Additionally, both of the broad composite indices showed significant declines slumping -31.64% for the 10-city national index and 30.67% 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.

More Pain, No Gain: S&P/Case-Shiller Preview for February 2009

As I had noted in a prior post, given their strong correlation, the home price indices provided daily by Radar Logic can be effectively used as a preview of the more popular monthly S&P/Case-Shiller home price indices.

The current Radar Logic data reported on residential real estate transactions (condos, multi and single family homes) that settled as late as February 23 appears to indicate that price declines are continuing in nearly every market with some markets accelerating notably.

Clearly, the impact of the recent stock market crash (that keeps on crashing) and ongoing economic crisis is bearing down on both consumer sentiment and, more fundamentally, credit availability resulting in a significant pullback in spending on homes and other costly purchases.

As the economic fallout continues, look for more markets to experience a reacceleration of price declines.


Phoenix, and Miami are clearly continuing their historic price slide as the number of distressed sales climb and buyer sentiment relents under the weight of the recessionary conditions.



Los Angeles, San Francisco and New York appear to be showing a slight bump up in prices on a month-to-month basis but still remain significantly below each series respective 2008 level. It’s important to note that both the S&P/Case-Shiller and RPX data is NOT seasonally adjusted so in all likelihood these regions are just experiencing a little pause in the decline coming from the spring sales volume pickup.



Boston, Denver and Chicago all appear to be following the typical seasonal pattern of increasing prices during the high transaction months of the spring and early summer and price declines during the fall and winter but it is important to note for Chicago and Boston, prices are clearly trending lower.

Washington DC continues to be a nearly perfect examples of a market that has broken down under the strain of the housing bust and wider economic turmoil showing consistent price declines throughout spring and summer months where normally strong seasonal sales patterns typically brings increasing prices.

New Home Sales: December 2008

Today, the U.S. Census Department released its monthly New Residential Home Sales Report for December showing continued and even accelerating deterioration in demand for new residential homes across every tracked region resulting in a startling 44.83% year-over-year decline and a truly horrendous 76.17% peak sales decline nationally.

It’s important to keep in mind that this stunning year-over-year decline is coming on the back of the significant declines seen in 2006 and 2007 further indicating the enormity of the housing bust and clearly dispelling any notion of a bottom being reached.

Additionally, although inventories of unsold homes have been dropping for well over a year, the sales volume has been declining so significantly that the sales pace now stands at an astonishing 12.9 months of supply.

The following charts show the extent of sales declines seen since 2005 as well as illustrating how the further declines in 2008 are coming on top of the 2006 and 2007 results (click for larger versions)


Look at the following summary of today’s report:

National

• The median sales price for a new home declined 9.31% as compared to December 2007.
• New home sales were down 44.83% as compared to December 2007.
• The inventory of new homes for sale declined 27.7% as compared to December 2007.
• The number of months’ supply of the new homes has increased 31.6% as compared to November 2007 and now stands at 12.9 months.

Regional

• In the Northeast, new home sales were down 50.0% as compared to December 2007.
• In the Midwest, new home sales were down 31.1% as compared to December 2007.
• In the South, new home sales were down 46.0% as compared to December 2007.
• In the West, new home sales were down 47.4% as compared to December 2007.

Video(s) of The Day - Shameless Speculators and Harvard’s Housing Outlook Circa May 2005

Just so you know where your tax dollars will be going take a look at this New Hour piece from May 2005 (ironically almost the price peak in the earliest bust areas) that chronicles the state of the booming housing markets at the time… sick and disturbing speculators, absurd bidding wars, people recklessly reaching for affordability.

Then Nicholas Retsinas, Director of Harvard’s Joint Center for Housing Studies, argues for “stagnating” and “sticky” prices rather than a popping bubble correction.