Case-Shiller Home Data Dismal -- Even in San Diego

February home value data from Standard & Poor's/Case-Shiller strongly suggest a coming double-dip nationally. The composite of 20 major metro areas was down 3.3% from February of 2010. "San Diego, which had posted 15 consecutive months of positive annual rates, ended its run with a minus-1.8% rate of change in February 2011," said S&P/Case-Shiller. "The 20-city composite is within a hair's breadth of a double dip," says S&P economist David M. Blitzer. "There is very little, if any, good news about housing. Prices continue to weaken, trends in sales and construction are disappointing." Between January and February, San Diego values fell 1.3%, which was lower than the 20-composite decline of 1.1%. However, the year-over-year decline of 1.8% topped the composite's 3.3% drop. San Diego housing values are now down 38% from their peak of November 2005.

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Comments

Hypothetically, Don, how would I make a bet (oh, right, "invest") that the prices go down to 2002 levels and lower (adjusted for inflation) based on the theory that since wages haven't increased since even before then, housing prices must return to the historic relationship with income.

Further, since markets tend to over-shoot up and down, it's reasonable to expect prices to fall far below that historic relationship before the market recovers.

So, say I had a thousand dollars burning a hole in my pocket...how would I bet (oh yeah, it's "investing") on this analysis.

Best,

Fred

Hypothetically, Don, how would I make a bet (oh, right, "invest") that the prices go down to 2002 levels and lower (adjusted for inflation) based on the theory that since wages haven't increased since even before then, housing prices must return to the historic relationship with income.

===================== They will drop even further than that. Even though wages have been stagnant for the last 11 years;

1) there are far less jobs today than in 2002, and

2) there are still 1.8 million homes that are in the REO process.

So-believe me, it will get worse before it gets better.

Yes, it's possible that average and/or median housing values could go below 2002 levels. Best, Don Bauder

Serendipitously, Fred, Radar Logic has announced a program that permits you to buy futures contracts on housing prices. It will be traded on the CBOE Futures Exchange. It can be used to hedge against rising or falling real estate values. I don't see why an individual speculator could not bet on values going one way or another. To address your question: Could prices get back to 2002 levels? Sure. They are almost back to the lows of 2009. Best, Don Bauder

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