Case-Shiller Home Price Levels. Click to expand and see other graphics.
In fact, New Yorkers and residents of other dense urban centers always can pay little heed to the monthly report of housing data from Case-Shiller or any other single sources of information.
Their one virtue is to examine a dated snapshot of the national housing market, excluding areas such as the Big Apple, where few single-home sales occur. Case-Shiller leaves out apartment sales and its reports embrace whole Metropolitan Statistical Areas (MSAs). In addition, the sample of 10 or 20 cities is suspect in my layman’s eyes.
Manhattan by gemini spy on Flickr.
In the case of Manhattan, the MSA covers all the boroughs plus suburban New Jersey and Westchester County. And as everyone knows, the percentage of single-family home sales in the borough never reaches beyond the lowest digits.
I suppose investors and others who might be looking, unreasonably, at the national market for trends in the biggest cities can benefit from glancing at the numbers. But using those statistics for anything greater than a very rough gauge of what is or, worse, will be occurring in a given market is pure folly.
All that said, you may well be able to enliven your cocktail chatter by knowing the following from the release yesterday of S&P Case-Shiller indices, which found that the annual rates of decline of the 10-City and 20-City composites continue to improve, in spite of price declines being measured across many markets during November.
It was approximately the tenth month of improved readings in the annual statistics, beginning in early 2009, and the third consecutive month the statistics have registered single digit declines, after 20 consecutive months of double digit declines.
The 10-City and 20-City Composite Home Price Indices declined 4.5% and 5.3%, respectively, in November compared with the same month last year.
According to Case-Shiller (which, as faithful readers know, I never tire of criticizing), average home prices across the United States are at similar levels to where they were in late 2003. From the peak in the second quarter of 2006 through the trough in April 2009, the 10-City Composite is down 33.5% and the 20-City Composite, 32.6%. The peak-to-date figures through November 2009 are -30.0% and -29.2%, respectively.
While company cited “broad improvement in home prices as measured by the annual rate,” the devil is hiding you know where: in the details.
Only five of the markets saw price increases from October to November versus October, and four – Charlotte, Las Vegas, Seattle and Tampa – posted new low index levels as measured by the past four years. Any gains they might have seen in recent months have been erased, leaving November as their current trough value.
At the same time, month-over-month improvements were seen in Los Angeles, Phoenix, San Diego and San Francisco for at least six consecutive months. And Dallas, Denver, San Diego and San Francisco have finally entered positive territory from a year earlier.
As David M. Blitzer, chairman of the Index Committee at Standard & Poor’s, noted, the date present another complication. Said he:
“To add more mixed signals, we are in a seasonally weak period for home prices, so the seasonally-adjusted data are generally more positive, with 14 of the markets and both composites showing improved prices in November. On balance, while these data do show that home prices are far more stable than they were a year ago, there is no clear sign of a sustained, broad-based recovery.”
As for other indices, they also add to the mixing of results. The Federal Housing Finance Agency says U.S. house prices rose 0.7 percent on a seasonally adjusted basis, 10.3 percent below the April 2007 peak. Unfortunately, the agency’s index excludes housing sold for no more than around $729,000. Over the preceding 12 months, goes the report, prices rose 0.5 percent.
And last week, the data firm First American CoreLogic said national home prices, including distressed sales, declined by 5.7 percent in November 2009 compared with November 2008. October’s year-over-year price decrease was 7.6 percent. Excluding distressed sales, year-over-year prices declined in November by 5.1 percent.
On a month-over-month basis, prices fell by 0.2 percent in November 2009 versus October, according to CoreLogic.
Finally, Radar Logic found that home sales across 25 metro areas increased 1.5 percent month-to-month and 46.7 percent year-over-year in November. Its index measures changes in the price per square foot of homes.
Transactions increased in nine of the 11 months ending in November 2009, including those from July to October, when sales typically decline. Commented the research firm’s president and CEO, Michael Feder:
“We believe that the housing market is poised for significant recovery.”
Anyone following the national housing market likely will be interested to see the changes that Case-Shiller and the other indices record relative to their own reports, not relative to the others, as a way of spotting potential trends. However, my advice is to take the information with a heavy helping of skepticism and a dollop of comparison.
In my estimation, it makes the most sense to pay attention to Mayor Michael Bloomberg’s latest dietary campaign and take the data with a grain of salt. Only a grain.
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