Here is the updated Case-Shiller graph for the San Francisco index. The index was up again for the second month. This month I did not include the CME futures data as it appears there is a problem with their website and the prices are not updating from last month.
It has been pointed out that the data is seasonal, so the May increases probably do not mark a turning point for the real estate market. Sure enough, if you look at the monthly changes in the index, it is clear that May has been strong in the past. The trend looks to be continuing this year.
Another point, stressed by Mark Hanson of the Field Check Group is that the indexes will move up as high priced homes begin to sell at lower prices.
Here is Mark on the subject in early June:
I was on CNBC several weeks back with Erin Burnett and she asked if there was any chance for the Case-Shiller to suddenly spike one month in the near-term. I said ‘no major spike — but there absolutely will be price leveling and even rising in some the hardest hit MSA’s’. It’s time to revisit this.
In my April 30th report entitled ‘Housing (bottom) Update’ I highlighted the reasons why some of the hardest hit MSA’s might do well over the near-to-mid term:
- artificially depressed supply through gov’t and bank-specific foreclosure moratoria;
- artificially low rates and temporary tax benefit;
- foreclosure mix-shift creating an artificial skew higher in reported median and average prices;
- And fleeting seasonal demand.
Essentially, everything is artificial and so should the bottom that comes out of it. I have been looking for this false bottom phenomenon to play out for months and believe it is here.
My neighnor put their home up for sale at $825k,sold it in 3 days.Multiple offers,sold at $860k.A well designed,well built and well maintained 3/2 with a detached 2 car garage and an 600 sq ft artisits studio on 2 acres,decent garden.Top rent would be $2,200/month.In west county.The new buyers sold a more expensive home in another part of the bay area and are retiring,they had the cash,but this still does not make any sense to me at all.It is another reminder that home buying is seldom a rational decision.
ReplyDeleteLots of buyers who are listening to the same cheerleaders of 2005. I hate the NAR radio commercial that states, "It's never been more affordable to buy a home." How can they get away with such lies? Right now is probably the most affordable in the last 9 years, but not ever.
ReplyDeleteMy buddy started looking for a house this summer (despite my supporting data that it is not the bottom), and he's getting outbid on all his offers. The one time he won the bid, the seller was too nervous to accept because they thought the appraisal at that price would not hold up. The last house he bid on had a total of 42 bids supposedly.
We are having a crazy seasonal fake out from a bunch of fence sitters who are believing the "bottom" crap and think they will get their chance to profit in a few years.
We will likely see new lows this winter.