Tuesday, March 31, 2009

January S&P/Case-Shiller

It's the last Tuesday of the month, time for the January S&P/Case-Shiller update. It's as steep as ever, remarkably symmetrical, nothing beginning to flatten. Los Angeles (including Orange County) is now down 39.2% from September 2006 peak, back to September 2003 levels.

By month that's 2.8% from December, 2.5% from November, 2.2% from October, 2.6% from September, 2.5% from August, 1.8% from July, 1.6% from June, 1.4% from May, 1.9% from April, 2.2% from March, 3.6% from February, 4.3% from January, 3.7% from December 2007, 3.6% from November, 3.6% from October, 2.1% from September and 1.3% from August. The national (orange line, their original 10-city Composite) index is down 30.2% from its peak in June 2006.

Besides the original city index they have each city broken into Low, Middle, and High tiers (Under $309,184, $309,184 - $470,182, and Over $470,182; updated for January). Los Angeles' Low Tier rose the most and has fallen back the most so far from its November 2006 peak, now over 50% at 50.6%.

The High Tier rose the least and plateaued for awhile before falling more steeply, now down another 2.3% to 29.3% from its June 2006 peak. It hasn't retraced quite as far, only to February 2004.

60 comments:

Anonymous said...

If the symmetry holds, it looks like home prices will be back to 1996 levels in late 2010.

Of course, SM prices are 18 months behind this curve , but on the same trajectory. So if memory serves me right, 90402 houses were selling for $700,000 in 1996 and will be again in 2012.

They will be a whole lot of people very deep under water.

Anonymous said...

yeah right 700K

Anonymous said...

700K 1996 dollars adjusted for normal inflation would be what?

Anonymous said...

Assuming 3% inflation over 13 years, $1,027,973.60.

Anonymous said...

glad to see sanity returning to the market.

Anonymous said...

Would it be possible to show this as a logarithmic graph? Might be more usable.

Anonymous said...

700K is feasible, especially if we enter a depression. The state of California is approaching depression-level unemployment, especially when you take into account the BS ways the government manipulates the unemployment numbers. When you add in the underemployed and those who supposedly "gave up" looking for a job, the real number is probably at 20% already.

Westside Bubble said...

logarithmic graph?

Can Excel do that?

Real Estate Comments also graphed the derivative (rate of change) of the Case-Shiller line, if that's interesting.

A note on the Case-Shiller Methodology, showing its lag and smoothing: "The indices are calculated monthly, using a three-month moving average algorithm. Home sales pairs are accumulated in rolling three-month periods, on which the repeat sales methodology is applied. The index point for each reporting month is based on sales pairs found for that month and the preceding two months. For example, the December 2005 index point is based on repeat sales data for October, November and December of 2005."

Anonymous said...

How did you get the data prior to 1987? Where can I get the 1980-87 data?

JL said...

Are Case-Shiller numbers nominal or adjusted for inflation?

Given the bottom of the last decline was in 1997, we may be looking to go back to 80's prices.

Anonymous said...

For log charts in Xcel, you can either:

1) create a new column, which has the formula '=LOG(A1,2)' etc.
then chart that column against time.

or

2) when you create a chart, choose 'custom types' then scroll down and select 'logarithmic'.

log graphs work well for things which grow with compounded interest, ie are index linked to inflation.

Wooster said...

Or you could post the raw data set and let your loyal readers have a wach at it.

Anonymous said...

LOL at the "inflation adjusted" crowd.

Is that like the "Real Estate Always Goes Up" rule?

How about "deflation adjusted"?

Anyone who buys based on "inflation adjusted" pricing deserves the screwing they're going to get.

Richard Mason said...

For log charts in Xcel, you can either:
1) create a new column, which has the formula '=LOG(A1,2)' etc.
then chart that column against time.
or
2) when you create a chart, choose 'custom types' then scroll down and select 'logarithmic'.


The problem with method 2 is that you then don't have good axis control because Excel (stupidly) insists that the graph ticks be in factors of 10.

The problem with method 1 is that the axis is then marked with values of the log of the index rather than the index. In this case, that's not too much of a problem, since the C-S index doesn't really have a "meaning"-- it's only meant to be compared to itself at different times. Log(C-S index) has just as much meaning.

Method 1 seems more appropriate here.

Richard Mason said...

Inflation adjustment makes sense if you mean inflation of rents. Not some generalized CPI inflation statistic. Period. End of story.

A house shouldn't be worth more because the price of milk goes up, or worth less because the price of plasma televisions goes down.

If you base your decision on price/rent ratios, then you are already figuring in the correct inflation/deflation adjustment.

Anonymous said...

re: logarithmic graphs...

First off, I am a housing bear, but that is sort of irrelevant to using log graphs or not.

Since 1900 there has been some, average, low level of positive inflation (1-2%/year), both of goods and wages. Over the long term certain goods (such as houses and stocks) may bubble above or below that general trend line. In 1950, when a house was a few thousand dollars, a $500 change in value was huge. Now, it is nothing. That is why over the LONG term, log graphs can be a useful alternative way of looking at things which grow/shrink in a compounded manner. Frequently long term stock charts are shown in log form.

Sorry for going off topic, but perhaps it is not so far off topic, because it is useful to look at graphs/charts from a fresh angle.

Richard Mason said...
This comment has been removed by the author.
Richard Mason said...

Another thought on linear versus log.

Suppose there is a property that has dropped from $1.0 million to $500K... but, there is a possibility that the price could continue to drop as low as $250K.

One way of thinking about this is that the majority of the loss has already happened. If you buy now then at worst you lose $250K in value... not as bad as the guy who lost $500K before you.

A linear graph will psychologically support this kind of thinking. The $250K loss will only look half as bad as the $500K loss.

But, on a percentage basis, the drop from $500K to $250K is just as bad as the drop from $1M to $500K. If you're an investor, you've lost the same percentage of your portfolio. A log graph will psychologically support that way of thinking; the two drops will look the same on a log chart.

Which view is correct? If you want to buy a particular place to live and the question is how much you will spend for it, then the linear view has merit. On the other hand if you have a definite budget amount you plan to spend and the open question is how much real estate you will get for it, then the log view is the correct one.

Scooter said...

anonymous @ 5:44 PM said ...

LOL at the "inflation adjusted" crowd.

Is that like the "Real Estate Always Goes Up" rule?

How about "deflation adjusted"?

Anyone who buys based on "inflation adjusted" pricing deserves the screwing they're going to get.

April 1, 2009 5:44 PM




I agree with you 1000%. That's why I am not going to buy another loaf of bread until it drops to 23cents, like when I was a kid. Also, no more soda pop until I get it for 7 cents. I've got half a tank of gas, and when that's gone, I will wait for 45 cents-a-gallon gas.

This inflation-adjustment stuff is bogus. (I just hope my boss doesn\t cut my pay to $2.25 per hour)

Anonymous said...

You guys are a bunch of excel/logarithmic NERDS!

Anonymous said...

So this is where the Pedantic Society of America meets. Good to know.

If a nice house NOM is 1.5, buy it.

If a nice house NOW is 1.0, buy it.

If a nice house in SP is 750K, buy it.

Stick those into your logarithmic functions.

Anonymous said...

But what if they are dumps/teardowns? Where's your math for that?

Anonymous said...

"If a nice house NOM is 1.5, buy it.

If a nice house NOW is 1.0, buy it.

If a nice house in SP is 750K, buy it."

Excellent rule of thumb, this is what Bubbble-adjusted prices will look like when the correction is over. Of course if it doesn't happen for two more years we need to adjust very slightly depending on what rents do. There's a lot of dumb-dumbs out there starting to buy because they are getting 10% off peak prices. They have no idea we're headed to 30-35% off peak and after that it will stay at that level for years.

Anonymous said...

http://www.labusinessjournal.com/article.asp?aID=13343015.9375064.1759251.8087388.34.748&page=1

Westside Bubble said...

How did you get the data prior to 1987? Where can I get the 1980-87 data?

I had to dig to find it again, because the current files' data only go back to 1987.

On the Tiered Price Indices page, download the oldest one (August 2007). It goes back to January 1991.

Or you could post the raw data set and let your loyal readers have a wach at it.

Download per above. I'd be happy to post any graph images you'd like to send (to westsidebubble at gmail).

This is a good group, that even gets into the details of log graphs!

Westside Bubble said...

Thanks, Anon, for the link. Here it is as a clickable, and its title: LA Business Journal

‘Closed’ a Sign of Times for Boutiques

RETAIL: Montana Avenue is one shopping street on a rough road.

Wooster said...

That's what happens when property owners try to get $15-18 psf/month on retail boutique space. Any hiccup in the market is catastrophic to the stores that need to churn regular, specialized inventory just to make insane rents. Rents there will plummet and you'll likely see a speedy recovery with similar vendors taking up the space. I was pushing for Big Lots to consolidate some space and launch a new concept in haute retail.

Anonymous said...

Unfortunately, that horrible Williams & Sonoma place will probably survive, and bring in more chains to complete Montana's transformation into Third Street Santa Monica. Then we'll get the tourists and the homeless vagrants.

Anonymous said...

Oh, there are already vagrants on Montana. You probably just shut them out and wiped your mind clean of their image, but I was at Father Office two nights ago and there were a few hanging out in the adjacent alley.

Anonymous said...

The cops do a good job of keeping vagrants off of Montana - vagrants are to stay in Ocean Park where they belong

Anonymous said...

Is it too much to hope that the City will do its job and discourage these vagrants from loitering in Santa Monica? They're very welcome in Westwood village, they seem to love hanging out in the coffee shops.

Anonymous said...

The city does its job - it moves the vagrants away from Montana Avenue.

SMRR wants them in the rest of SM and that is where they are

Anonymous said...

Look at who lives North of Montana - people that donate TONS of money to the Democratic Party - both locally and nationally.

Look at who lives in the rest of SM - people that don't "bundle" huge contributions.

At the end of the day, if vagrants come North of Montana some pretty heavy political muscle comes down on the cops to move the vagrants out.

Just go to Huffington post and other web sites that show political contributions - follow the money and you will understand why the vagrants are all over the rest of SM but not N of Montana

Anonymous said...

Look at who lives North of Montana - people that donate TONS of money to the Democratic Party - both locally and nationally.

Wait ... but I thought liberals in general (since I am one) are tolerant of ALL people? Oh, that's right, we're talking about the "limousine liberal" crowd, aka "do as we say, not as we do".

Anonymous said...

"Wait ... but I thought liberals in general (since I am one) are tolerant of ALL people? Oh, that's right, we're talking about the "limousine liberal" crowd, aka "do as we say, not as we do"."

Yes, the same ones who think things like school vouchers are ridiculous, and who then send their kids to private schools as fast as possible. But hey, Obama was "seriously considering" sending his kids to public schools in DC (yeah right).

Anonymous said...

Stop the liberal bashing. Do me a favor and look at the voting records of those that live North of Montana - almost all vote Democrat / liberal.

I respect very much your right to be a republican, just do it in a place that already has republicans. Don't move to alaska and then complain how darn cold it is. Don't move to the 90402 and complain about the lack of republicans.

Anonymous said...

Let's change the subject back to real estate - single family homes (that need some TLC) are now officially selling for under 500 thousand each in Sunset Park

Check out 2666 32nd street - the bank that owns it is depsperate and hungry and feels burning need to sell it - will accept in the 400's

Anonymous said...

Go check this house on Zillow

Zillow is not the most reliable source of info in the world. That being said, Zillow shows this house as having been "worth" 1.15 million in summer of 2007

Now it is ready to sell in the 400s

what % decline is that again?



Seems to suggest a massive plunge just since December 2008 - in December 2008 the crummy small house at 2610 24th sold for 960 grand

Anonymous said...

"Stop the liberal bashing."

I agree; I'm a liberal too and pretty typical of the kind of family that lives north of Wilshire. But don't think that just because we're liberal we automatically take the side of the lunatic vagrants on our streets--we love family too, we value our neighborhood and neighbors too. Don't smear us just because of a minority of loud "radicals" who will side with the psychotic homeless against the neighborhood. They do not represent us or the typical family here. Thanks.

Anonymous said...

Questions for liberals NOM: How do you feel about the exploding deficit created by The One?

Does it make you feel all warm and fuzzy that government spending is out of control and your kids future has already been driven into bankruptcy?

In other words, the worst of this new Obama economy has yet to appear. This will push the NOM values even lower and push wages down across all sectors.

The real question is, when will the American people throw the Democrats out of office?

2010? 2012?

Anonymous said...

12:32
I respect your point of view. You have obviously put a lot of thought in to this.

But Santa Monica is not the place for your political views. Please move to Manhattan Beach where you will be more comfortable

Anonymous said...

But Santa Monica is not the place for your political views. Please move to Manhattan Beach where you will be more comfortable

Ah, one nation, indivisible and all that ... *sigh*

Anonymous said...

"But Santa Monica is not the place for your political views."

I think it should have read, more correctly: "Westside Bubble is not the place of voicing your political views."

Please keep this blog focussed on real estate, and move your discussions of politics somewhere else.

Anonymous said...

How do I feel about the exploding defecit created by the One? Feels better than that of his predecessor. You seem to forget that this defecit problem was created by Bush and the trajectory of the economy was determined during the Bush years. And within a few months of Obama being in office you are already proclaiming failure despite the terrible position we have been put in by the previous administration? If McCain had one I imagine we'd be growing our GDP at 5% in perpetuity three days after he was in office?

The problem with Republicans is that they stick to these mantras (stay fully on message) so well that eventually people might actually start to call this the Obama recession and the repetetive use of phrases like "The One" will make their way into our psyche and actually increase the chances that a reasonable person would feel disappointment about his policies rather than benchmarking his policies against Bush and the mess Obama inherited wen he took office.

Anyway, back to real estate.

Anonymous said...

"the repetetive use of phrases like "The One""

Maybe you've missed all of his speeches, but go look at one on youtube and check out the crowd. That's where that label is coming from, not from the "vast right wing conspiracy talking points machine".

Anonymous said...

I didn't know the crowd was labeling Obama "The One"

If I see a crowd excited by Obama does that mean that he's "The One"?

You are an idiot and it makes me sad.

Anonymous said...

"You are an idiot and it makes me sad."

OK.

FYI, smart guy, it's "deficit", not defecit.

"If McCain had one"

LOL, try to concentrate when typing.

Anonymous said...

Way to make your point about grammar. Was there anything else?

Mr Mortgage is BACK!!! said...

The Hard (to handle) Numbers

In CA in last year, there were approx 24k sales of homes valued at more than $1 million. During the same year only about 4500 high-end homes made it all the way through the foreclosure cycle and ended up as REO keeping this form of supply at manageable minimums.

But now, Jumbo loans and the homes attached to them are screaming through the foreclosure process. Total sales of mid-to-upper end homes have fallen off sharply from the 24k pace to closer to 12k in 2009. A foreclosure wave is about to hit that looks very similar to the beginnings of the Subprime crisis in 2007. If 80% of all Notice-of-Defaults end up as foreclosure-related REO listed for-sale supply (based upon the last month’s NOD counts) the supply from this source alone will equal total sales making for infinite inventory. Add in Ma and Pa Organic that make up 66% of all listings and supply in this sector will also dwarf demand resulting in a house price free fall this summer.

Anonymous said...

"eventually people might actually start to call this the Obama recession"

That's utter stupidity, which doesn't surprise me coming from a liberal mind. But it's funny that you would mention "Republican mantras", because I vividly recall in 2001 the entire media labeling the recession "Bush's recession", when it started about one month after he took office, and any sane person would know that whatever caused the recession happened more that one month prior. No one has even remotely suggested this will be called Obama's recession, but hey you're a liberal, don't let the facts stop you.

"How do I feel about the exploding defecit created by the One? Feels better than that of his predecessor."

Feels better, huh? Only to a socialist.

"the repetetive use of phrases like "The One" will make their way into our psyche"

They should. Obama was elected by naive, wide eyed fools who worship him.

Anonymous said...

enough with the lame Obama bashing you idiot....get offa this blog and move on over to Fox news jerk.

Anonymous said...

I love how Republicans get so upset that Obama was voted in. Did you really expect McCain to win? It's like the mother whose son is on death row but she still pleads his innocence and everlasting virtue. I mean, John Kerry didn't have a snowball's chance in hell, but at least most Dems I knew saw that going in. Repubs seem to think their dogma should be everyone's, that change is indeed a bad thing, and that the democratic process only works properly when your guy wins. You guys F'd it up - accept it and move on! Dems will F it up sooner or later, it's the way it works! Take a walk around the block for a change. Talk to your neighbors. Ease up on the hate. Turn off the Bill O'Reilley, the Rush, the Hannity, settle the F down, and realize that the sun will still come up tomorrow, the Middle East will suck no matter what, and no one is going to take your precious rifle away.

Anonymous said...

"You guys F'd it up - accept it and move on!"

That is classic coming from a liberal. I bet you and your friends still talk about how the Republicans stole the election in 2000. But we are the ones who can't deal and need to "accept it and move on". Oh the hypocricy.

Anonymous said...

Uh, everyone has moved on but you. Please stomp your feet somewhere else.

Anonymous said...

"Uh, everyone has moved on but you."

When your side wins, it's time to move on. When your side loses, talk about stealing elections for years. Kind of sounds like a three year old who doesn't get his way.

Anonymous said...

Stealing an election is a pretty big deal though. However, it didn't seem to get much action in the mainstream media for much longer than a few weeks.

Anonymous said...

I am really sick of hearing you democrats and you republicans debating here. this blog is not the place for it. Both of you are wortheless scumbags anyway. The democratic party and the republican party both came together in harmony to move 12 million illegals from south of the border in to our country.

As a result, gangs of illegals from south of the border are driving around kidnapping young women in the beach cities. Thank you - as i said both your political parties are responsible

_______


Woman escapes kidnap
try in Hermosa Beach
Police think the attempt is related to a similar Redondo Beach incident in January.
By Larry Altman, Staff Writer
Posted: 04/06/2009 10:34:16 PM PDT



RELATED» Crime & Courts news
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HOT TOPIC: » What our readers are saying
A

Sketch of suspect from other incident woman fought off three would-be abductors who tried to pull her into a white van Monday on a Hermosa Beach street, police said.
The attempted kidnapping was eerily similar to a crime reported in Redondo Beach in January, and police said it might be related.

In this crime, the woman could see ropes inside the van, Hermosa Beach police Sgt. Robert Higgins said.

The woman told police that a dirty white van pulled up to her as she walked in the 600 block of Fourth Street about 2 p.m.

Two men were seated in the cab and another in the back.

"The victim fought back and was able to escape from the suspect's grasp," Higgins said. "The victim fled the area and called police."

Anonymous said...

"Stealing an election is a pretty big deal though. However, it didn't seem to get much action in the mainstream media for much longer than a few weeks."

Maybe that's because it didn't actually happen.

Anonymous said...

"gangs of illegals from south of the border are driving around kidnapping young women in the beach cities"

You can tell all that from a description. You are a crime fighting genius! Why are you wasting your time on a housing blog--you should be out fighting crime.

Christopher Columbus was an undocumented immigrant just like your momma! I say let them all in. If they crowd out idiots like you from California making it a much nice place for me to live.

AMIT said...

You knows much about markets..

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