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Bottoming Market
S&P/Case-Shiller August home price indices is in. Here's how pricesin the 20 cities performed in the past year, via MarketWatch.
Phoenix, down 30.7%; Las Vegas, down 30.6%; Miami, down 28.1%; SanFrancisco, down 27.3%; Los Angeles, down 26.7%; San Diego, down 25.8%;Tampa, down 18.1%, Detroit, down 17.2%; Washington, down 15.4%;Minneapolis, down 13.8%; Chicago, down 9.8%; Seattle, down 8.8%;Atlanta, down 8.5%; Portland, down 7.6%; New York, down 6.9%;Cleveland, down 6.6%; Denver, down 5.1%; Boston, down 4.7%; Charlotte,down 2.8%; Dallas, down 2.7%.
OK. There are many buyers who are still waiting on-the-fence thinkingthat they'll wait for prices to come down.. a little bit more. Thetruth is: No one has the crystal ball to see what's going to happen tothe market this month let alone next month. Hey, do we need psychics totell us what's going on...
The thing is with most housing data out there, it's almost always'rear-view' mirror. It shows past performance , trendlines and doesn'tsay much about what's currently going on in the market. We use comps(..short for comparables), or in the pro lingo CMA (current marketanalysis) - to show what properties have been sold, under contracts andactive - in real time. We use comps when a buyer is getting ready tomake an offer for a specific property. Or, in the case of sellers, whenthey're getting ready to put the house on the market.
My observation been in some pockets of neighborhoods where prices havegone down 20-40% from the peak (2005), you'd see buyers snappingproperties left and right. This is the true especially in places whereyou see multiple contracts is back on the table. Multiple contracts isthe 'disease' which eventually caused the housing market to get upsidedown. At the time many buyers ended up paying premium than what thehouse is worth. Conditions which eventually leads to housing bust.
So using a combination of comps and multiple contracts trends in a hood(this requires some intel work), those are pretty darn good marketindicators to use to see if prices for a hood has reached bottom andready - to bounce back.
TAKE TWO. The sign of a bottoming market from an economist point of view, via Reuters.
"But these data are for August, before the real storm hit in terms offinancing troubles and people's recognition of their seriously damagedbalance sheets due to the stock market falling apart. This reading cameonly on the brink of great difficulties, both in terms of obtainingfinancing and willingness to buy a home in the first place. We need tosee what happened to home prices in September and October, mainlyOctober. But such as it is, at least a few markets are showing smallermonth-to-month declines than they did last year. And that's what abottoming of prices will eventually look like."
S&P/Case-Shiller August home price indices is in. Here's how pricesin the 20 cities performed in the past year, via MarketWatch.
Phoenix, down 30.7%; Las Vegas, down 30.6%; Miami, down 28.1%; SanFrancisco, down 27.3%; Los Angeles, down 26.7%; San Diego, down 25.8%;Tampa, down 18.1%, Detroit, down 17.2%; Washington, down 15.4%;Minneapolis, down 13.8%; Chicago, down 9.8%; Seattle, down 8.8%;Atlanta, down 8.5%; Portland, down 7.6%; New York, down 6.9%;Cleveland, down 6.6%; Denver, down 5.1%; Boston, down 4.7%; Charlotte,down 2.8%; Dallas, down 2.7%.
OK. There are many buyers who are still waiting on-the-fence thinkingthat they'll wait for prices to come down.. a little bit more. Thetruth is: No one has the crystal ball to see what's going to happen tothe market this month let alone next month. Hey, do we need psychics totell us what's going on...
The thing is with most housing data out there, it's almost always'rear-view' mirror. It shows past performance , trendlines and doesn'tsay much about what's currently going on in the market. We use comps(..short for comparables), or in the pro lingo CMA (current marketanalysis) - to show what properties have been sold, under contracts andactive - in real time. We use comps when a buyer is getting ready tomake an offer for a specific property. Or, in the case of sellers, whenthey're getting ready to put the house on the market.
My observation been in some pockets of neighborhoods where prices havegone down 20-40% from the peak (2005), you'd see buyers snappingproperties left and right. This is the true especially in places whereyou see multiple contracts is back on the table. Multiple contracts isthe 'disease' which eventually caused the housing market to get upsidedown. At the time many buyers ended up paying premium than what thehouse is worth. Conditions which eventually leads to housing bust.
So using a combination of comps and multiple contracts trends in a hood(this requires some intel work), those are pretty darn good marketindicators to use to see if prices for a hood has reached bottom andready - to bounce back.
TAKE TWO. The sign of a bottoming market from an economist point of view, via Reuters.
"But these data are for August, before the real storm hit in terms offinancing troubles and people's recognition of their seriously damagedbalance sheets due to the stock market falling apart. This reading cameonly on the brink of great difficulties, both in terms of obtainingfinancing and willingness to buy a home in the first place. We need tosee what happened to home prices in September and October, mainlyOctober. But such as it is, at least a few markets are showing smallermonth-to-month declines than they did last year. And that's what abottoming of prices will eventually look like."
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