Las Vegas Case Shiller Index Shows Smallest Decrease in 10 Months

August 26, 2008

Today’s Las Vegas Case Shiller index numbers show a drop of just 1.6%, a dramatic improvement over last month’s 2.9%, and the smallest decline since last summer.  The pace of price declines has trended slower since January, 2008, and this month’s numbers continue in the right direction.

The improvement is even more impressive given the conventional wisdom that foreclosures are still driving prices sharply lower.

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-Frothing Mark

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Positive Housing Study

August 5, 2008

This report ran yesterday in the Washington Post.

One of the most interesting parts of it is what it says about the widely-watched Case-Shiller index:

The Case-Shiller index weights transactions by value. For example, it gives eight times as much weight to the sale of an $800,000 home as it does to a $100,000 home, meaning it is particularly sensitive to what is happening with high-priced homes in the largest, most expensive markets.

I blame myself for not having realized it. It explains why my recent prediction that Las Vegas Case-Shiller numbers would stabilize in July was off. Las Vegas has hit, I believe, price stability on housing below $300k, but transactions on houses higher than that are having a destabilizing effect. In my opinion, there are very few houses worth more than $500k.


Case-Shiller Overstates Decline, Says Noted Bear

June 25, 2008

Amidst the usual journalistic hyperbole of “plunges” and “steep falls” in the SF Chronicle were some very interesting statemnents on the nature of the Case-Shiller index.

“Prices are dropping […],” said Patrick Newport, U.S. economist with Waltham, Mass., research firm Global Insight. That said, he and others believe the index may be overstating the extent to which average homes already have declined in value.

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Case-Shiller is a repeat sales index, meaning it tracks only the actual price gains or declines for homes that have traded hands at least twice. In the current market, the homes that have done so recently increasingly tend to be foreclosed properties, said Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley.

It’s biasing the numbers in a way that makes it look a lot worse than it really is for the typical homeowner,” Rosen said. “I’m a bear, so I’d go with it if it were true.”


Case Shiller: The Tide Starts to Turn

June 24, 2008

The monthly Case Shiller numbers came out today, and from the shrill tone of the media’s reporting, you’d think the 4 Horsemen of the Apocalypse were riding again.

AP writes:

U.S. home prices tumbled in April at the fastest rate since a widely followed index was begun in 2000 with all 20 metropolitan areas surveyed posting annual declines for the first time

The problem with this analysis is that its based on year over year comparisons:

The Standard & Poor’s/Case-Shiller home price index of 20 cities fell by 15.3 percent in April versus a year ago, according to Tuesday’s report. Prices nationwide are at levels not seen since August 2004.

We already know that prices are down from April 2007. The only news worth looking at here is, how are prices trending now?

Case Shiller was down less, month over month, across the country, than any month since September 2007.

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Very similar data in Las Vegas:

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I’ve predicted that when next month’s numbers come out, we’ll be at 0% decrease, month over month, for Las Vegas. We shall see.


Breaking News: Great Case Shiller Numbers

June 24, 2008

Case Shiller came out for April this morning and as predicted, the numbers show Las Vegas recovery. There was month over month decline from March, but only 2%. That’s the smallest decline since last September, when inventory peaked. Look for Las Vegas price bottom to be confirmed in next month’s report, also as predicted here.

More analysis to come.


Pending Home Sales Up Across Country

June 9, 2008

Lots of good news this morning.

The National Association of Realtors writes:

Pending home sales unexpectedly increased in April to the highest reading since October…

One notable detail is the degree of increase in just the last 30 days:

The National Association of Realtors’ seasonally adjusted index of pending sales for existing homes rose to 88.2 from a March reading of 83.0, the lowest since the index was started in 2001

Another notable detail is that the West performed even better than this average, and is selling faster than a year ago:

The April index in the West climbed 8.3 percent from March and is 4 percent higher than a year ago.

Finally, it was nice to see the NAR specifically call out the selling activity in Las Vegas:

NAR Chief Economist Lawrence Yun noted that pending sales contracts have ticked up in areas with the largest price declines such as Detroit and Las Vegas.

See the full article here.


Case – Shiller Update

May 29, 2008

Las Vegas Case-Shiller index drops to 169. That data reflects March pricing and the drop from February. My prediction is that we’ll have one more good-sized drop in the index when it comes out at the end of June. Come end of July, though, the index will only go down if the sales that happened in the month of May were at lower prices than the sales that happened in the month of April. I predict that didn’t happen (interesting use of tenses there, no?). My prediction is that based on anecdotal evidence that foreclosures in April sold at lower prices than foreclosures in May, that we’ll see a leveling off of Case-Shiller in Las Vegas. That should get significant national attention, because I predict at the same time that most other parts of the country will continue to see price declines. You read it here first!

Chart courtesy of Calculated Risk: