Case can’t predict, and Times gets NYC wrong

Karl Case, whose name is practically immortalized as co-creator of the Case-Shiller Index, said in September that he thought the housing market may be near a bottom.

In a paper he presented at the Brookings Institution, the Wellesley emeritus professor of economics observed that nine of 20 metro areas had shown price improvement and the relationship between incomes and house prices was nearing a level that occurred at the end of previous housing downturns.

In the New York Times that same month, he wrote that “housing has perhaps never been a better bargain.”

That was September, you might note, so why take issue with him? One reason would be what he said in a radio interview at the end of January, only two months ago:

Prices have gone flat, bouncing around at what I think is essentially a bottom. We’re really going to have to wait to see what the spring market brings.

Now we are learning what the late winter/early spring market has delivered: a sobering further drop in prices.

Regular readers already know that I revel in excoriating the Case-Shiller reports because they lag in time, cover entire regions and include only single-family houses. 

What many folks don’t fully appreciate is that whole regions means in New York City’s case–itself a sprawling area and differentiated housing market–an expansive portion of real estate.  The region encompasses more than 20 counties including those in Pennsylvania, Westchester and Suffolk.

The New York Times yesterday utterly failed to note any of those caveats.  The article by David Streitfeld did not recognize that “city” is not the same as “region.”  Said he:

Eleven cities hit a new low for the downturn, including Charlotte, N.C., Miami, Tampa, Fla., and New York. Prices in New York have fallen 23 percent from their peak.

The writer went on to quote Karl Case as acknowledging that the latest numbers were “gloomy” and “we’re bouncing along a rocky bottom.”

If you can believe him, Case-Shiller and the New York Times, the bottom is indeed rocky.  That said, I do agree that these are unstable times outside of Manhattan.

And I’ll even concede that the index has proved to be one useful way of detecting national trends.  Just don’t expect it to mean one whit locally.

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Malcolm Carter
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Charles Rutenberg Realty
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