Case-Shiller Bay Area Update

The Case-Shiller numbers are out and for the first time in quite a while there was an uptick in the monthly data for the San Francisco data. On our chart, the value of our $600,000 home jumped from $323,588 in March to $325,484 in April. The futures market shows continued deterioration through the end of the year.

Regarding the rebound, this was predicted by Mark Hanson at the Field Check Group. With artificially depressed supply, artificially low rates, and foreclosures on the higher end of the market are putting some upward pressure on the index temporarily.

However, this does not mean the market is bottoming.

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.