Editore"s Note
Tilting at Windmills

Email Newsletter icon, E-mail Newsletter icon, Email List icon, E-mail List icon Sign up for Free News & Updates

March 25, 2008
By: Kevin Drum

HOUSING MARKET UPDATE....The good news: home prices in Charlotte, NC, were up 1.8% in January. Woot! The bad news: every other city is declining:

A widely-watched index of U.S. home prices fell 11.4% in January, its steepest drop since data for the indicator was first collected in 1987.

....The broader 20-city composite index also fell, dropping 10.7% in January from a year ago. That makes it the first time both indexes dropped by double-digit percentages.

....[David Blitzer, index committee chairman at S&P,] said all 20 cities S&P tracks have seen dropping prices for five consecutive months. What's more, the declines are growing in severity, with 13 of the 20 cities reporting their biggest single monthly decline in January.

For anybody waiting around to get a good deal on a house, this is good news. For the economy as a whole, not so good.

Kevin Drum 12:01 PM Permalink | Trackbacks | Comments (28)

Bookmark and Share
 
Comments


there's no place like home

Posted by: George W. Bush on March 25, 2008 at 12:04 PM | PERMALINK

as they say: It takes money to make money...(everyone else punts)

Posted by: benmerc on March 25, 2008 at 12:06 PM | PERMALINK

Its steepest drop since Standard & Poor's/Case-Shiller index started collecting data in 1987. - AP 3/25/08

hope the handbasket holds out....

Posted by: mr. irony on March 25, 2008 at 12:06 PM | PERMALINK

It's not a good time to buy yet. Prices have a long ways to go down. Keep renting and check back in 2 or 3 years. I thought I was getting a good deal in 1991 when prices had fallen 15% in my neighborhood. They kept falling for 5 more years.

Posted by: carl on March 25, 2008 at 12:07 PM | PERMALINK

Many Americans will be waiting for the price of bread to crest. Falling bread prices would be good economic news for them, but it is not going to happen.

Posted by: Brojo on March 25, 2008 at 12:15 PM | PERMALINK

Is that because Bank of America bought Countrywide, and Bank of America is headquartered in Charlotte, and they said (to someone in the real estate industry), "You better get that shit in order in MY house!"

Posted by: rusrus on March 25, 2008 at 12:30 PM | PERMALINK

It's not so bad if people are using their houses for homes and not piggy banks.

Posted by: David in NY on March 25, 2008 at 12:46 PM | PERMALINK

It's only bad if you're treating your house as a golden ticket to riches. For someone who just wants a roof over their head, the lower the price the better.

Posted by: anon on March 25, 2008 at 12:50 PM | PERMALINK

I'd say the good news is that we've lost 10% and the sky has not fallen (yet). At this rate the bust could bottom out in 2 or 3 years. So how much longer after rock bottom do the central banks have to juggle the credit crisis?

Posted by: jussumbody on March 25, 2008 at 12:59 PM | PERMALINK

If you want to be truly nerdy (as I always do) i think it should actually be w00t!, not woot!. 8u+ m483y 1m Wr0n9.

Posted by: kahner on March 25, 2008 at 1:07 PM | PERMALINK

People are not using their homes as piggy banks, they are using them to stave off disaster because they lost their jobs, got anew job that pays 25% of their old one, or had a monstrous medical bill. This is not people flying high on borrowed cash, it's people scrambling to survive.
And failing.

Posted by: pbg on March 25, 2008 at 1:17 PM | PERMALINK

The surge is working in Anbar, er, Charlotte!

Posted by: djangone on March 25, 2008 at 1:17 PM | PERMALINK

The Case-Shiller index is calculated using sales pairs, i.e., the same house sold at least twice. So the index you see is based on paired sales during Jan.,Feb.and March.
The methodology is here

It's a solid value indicator, but then S&P is a rating agency. The NAR stats are important, too.

Posted by: TJM on March 25, 2008 at 1:23 PM | PERMALINK

Even if some people were using their houses as piggy banks, Alan Greenspan said they were doing the right thing!

Posted by: fafner1 on March 25, 2008 at 1:27 PM | PERMALINK

It's not really city, but metropolitan areas. I guess in LA, it might not make a difference, but in San Francisco for instance, the CS index includes Alameda county, which is hurting more than San Francisco city & county.

Posted by: cedichou on March 25, 2008 at 1:47 PM | PERMALINK

For anybody waiting around to get a good deal on a house, this is good news.

Nope. Still too expensive. Everyone needs to pay attention to the economics of renting versus buying. Rents have remained somewhat sane (relative to incomes) and are an excellent measure of market value. The house prices need to fall to be in line with rents.

Posted by: Walker on March 25, 2008 at 1:53 PM | PERMALINK

Housing prices are coming down because they were too high. People bid them up on the unwarrantable (and impossible) assumption that prices would continue to rise, and rise faster than inflation, forever. Any "good" investment becomes a bad one if prices go high enough. Complaining about declining housing prices is like complaining that tulip bulbs no longer sell for a thousand dollars each.

Posted by: Alan Vanneman on March 25, 2008 at 2:14 PM | PERMALINK

Although Ross and surrounding Marin County might be a special case, a report last month by S&P/Case-Shiller showed that three metropolitan areas posted modest gains in home prices last year -- Seattle; Portland, Ore.; and Charlotte, .C.

Is that because Bank of America bought Countrywide, and Bank of America is headquartered in Charlotte, and they said (to someone in the real estate industry), "You better get that shit in order in MY house!" Posted by: rusrus

No. It's because, like Seattle and Portland, Charlotte has a strong economy. Las Vegas? What the hell is there, really, except the casinos and hotels? SoCal? Only and idiot would choose to move there. Ditto for Arizona.

Posted by: Jeff II on March 25, 2008 at 2:22 PM | PERMALINK

According to Michael Hudson(!pdf), median home prices began to rise faster than the consumer price index in 1997. Home prices probably will fall to their 1997 prices before housing market hits bottom.

Posted by: Brojo on March 25, 2008 at 2:28 PM | PERMALINK

I think McCain's statement today that the Fed Govt. should not bail out the banks or borrowers who took risks in the housing market is the first statement from any of the Pres. nominees about the housing crisis that has made any sense. Hillary and Obama's bailout plans would just exacerbate the housing crisis and it's clear that neither of them understands the financial issues surrounding our current housing debacle.

Posted by: Noel on March 25, 2008 at 2:29 PM | PERMALINK

It takes a long time for house prices to drop, because A. Only a fraction of the housing stock is for sale at any one time and B. Sellers ask for too much and the houses sit for sale for a very long time till the prices get dropped to market value. Owners who thought their place was worth $800,000 don't easily accept a contract for $400,000, particularly if they still owe $600,000.

I dunno where the bottom will be, but I doubt we're all that close to it.

Posted by: jimBOB on March 25, 2008 at 3:00 PM | PERMALINK

anon,

It's only bad if you're treating your house as a golden ticket to riches.

Yeah, the out of work construction workers are liking this "good news" alright. Same with the people selling the building supplies. Uh huh. They are all just really happy with this.

Idiot.

Posted by: Tripp on March 25, 2008 at 3:53 PM | PERMALINK

Housing prices are coming down because they were too high. People bid them up on the unwarrantable (and impossible) assumption that prices would continue to rise, and rise faster than inflation, forever. Posted by: Alan Vanneman

Don't make generalized statements about a fragmented market. Prices rose in the PNW because the economy is fairly strong and people want to live here. I have no idea why they were rising in SoCal or LV. Arizona is continuing to see an influx of retirees, so there is still some strength there depending on what segment of the market you are talking about. The collapse of the low and lower-middle parts of the market have nothing to do with the upper end.

Posted by: Jeff II on March 25, 2008 at 3:57 PM | PERMALINK

It shouldn't be a surprise to anyone that the price of houses is just as much subject to the law of supply and demand as is any other commodity. It is not written anywhere that the good times will last forever. Luckily, neither will the bad times.

Posted by: Trashhauler on March 25, 2008 at 4:16 PM | PERMALINK

It's not so bad if people are using their houses for homes and not piggy banks.

Shit, they're using their houses to pay their bills. I know too many people who max out their credit cards, then pay them off by taking the equity out of their house, then start running up the credit cards again. That's what's got everybody freaked out about house prices flatlining. Among other things, millions of Americans will get stuck with loads of credit card debt that they can't repay, with no relief coming through bankruptcy because of the recent reforms.

Posted by: dr sardonicus on March 25, 2008 at 5:06 PM | PERMALINK


I think CalculatedRisk recently showed a graph of how much our GDP was supported by equity lines. A lot. Ending that crack habit will not be pretty.

Posted by: kis on March 25, 2008 at 5:45 PM | PERMALINK

Arizona is continuing to see an influx of retirees...

Hmmm. Speaking of retirees, isn't there going to be a big problem for the first wave of boomers to retire if most of them will want to or *need to* sell the big boat anchors that they are currently living in and need to "downsize"? There has got to be a lot of anxiety right now for the 60-65 year old crowd that may still owe quite a bit on their homes and nervous about being able to pay their bills on retirements that may be in danger of evaporating in the near future.

Posted by: Doc at the Radar Station on March 25, 2008 at 6:08 PM | PERMALINK

Maybe it's time for Obama to relent on his opposition to legislative reform limiting credit card interest rates and/or at least on re-adjusting rates.

That might stabilize the credit problem a bit and help more people get through these uncertain times.

Posted by: MarkH on March 25, 2008 at 6:08 PM | PERMALINK
Post a comment









Remember personal info?










 

 

Read Jonathan Rowe remembrance and articles
Email Newsletter icon, E-mail Newsletter icon, Email List icon, E-mail List icon Sign up for Free News & Updates

Advertise in WM



buy from Amazon and
support the Monthly