Yesterday, being the last Tuesday of June, was, obviously, the day they released the April Standard & Poor’s/Case Shiller Home Price Index numbers. If you are a regular reader of this blog you know I think this is just about the only useful data we get on the housing market. And house prices aren’t just important to us consumer-homeowners, they are central to the whole Great Recession thing.
I know I shouldn’t be doing this. I talked about home prices yesterday, and I’ve singled out the Wall Street Journal’s Brett Arends way too many times already. (This will be his sixth mention in this blog. See also one, two, three, four, and five.) I don’t want to give the impression he is exceptionally bad. He’s merely typically bad, but writes often and on topics I like to talk about.
But Arends ran this column yesterday sharing his thoughts on house prices and, well, fish gotta swim and birds gotta fly.
He starts out by mentioning the previous day’s release of the Case-Shiller home price indexes for March. This update, which was, let’s face it, more or less as expected, was “startling” to Arends because of “What the latest data show about the long-term of the real estate market.”
Apparently, this last set of numbers was the missing piece needed to allow Arends to make the observation that since the late 1980s and early 1990s, house prices have only beaten inflation by one or two percentage points a year.
Yesterday was the last Tuesday of the month, so it’s time for our monthly update from the good folks at S&P who bring us the only home price index worth watching, the Standard & Poor’s/Case Shiller Index. This time ‘round the media coverage of the event was light, which I suppose I could spin as a good sign. Perhaps things are looking up and we are just not that worried about home prices any more.
But readers of this blog know I am a glass-half-empty kinda guy. My view is that the media doesn’t consider the release of some data on house prices to be all that interesting, however important it might be. Also, the release coincided with the release of some surprisingly strong consumer confidence numbers and a few other stories of the trivial type that the media likes to report on, like a Supreme Court nominee and some North Korean missile tests.
House prices are down. That’s not exactly news. The Case Shiller 20 City Composite was down 2.2% in March from February, 18.7% from the previous March, and 32.2% from the July 2006 peak.
Today brings another dollop of data on the housing market. The Wall Street Journal carries a story about a drop in real estate listings in April. An outfit called ZipRealty reports that listings were down 3.6% from March. In general, April is an up month, with the average monthly increase since 1982 being 4.8%, so the down tick is significant. Listings were off 21% from April 2008.
This could be an indication that the number of sales will be down in the coming months, which as I have written before, is bad news if you are a real estate broker.
But what if you are an ordinary reader of the WSJ concerned about house prices, both because it’s a central issue in the current crisis and possibly because you may yourself own a house? Then this isn’t news at all. Fewer listings could mean that the supply of cheap houses is being exhausted and soon buyers will start bidding up the prices of what’s left. Or it could mean that sellers have become discouraged and have pulled their houses off the market, waiting for conditions to improve. Or half a dozen other reasonable scenarios.
There is another video on the Big Subprime Mess making its way around the personal finance blogosphere. It doesn’t really compare to the now legendary Crisis of Credit Visualized, and in fact most of what it has to do with subprime mortgages is that it is called “Subprime”. But it has appeared on (at least) two blogs, Clever Dude and MoneyNing.
It’s a clever bit of animation. But it’s not exactly a cogent argument that, in the words of MoneyNing “sums up what everyone was doing during the last decade but it also brings up a good point – When is enough really enough?”
All advice in this blog is guaranteed to be worth at least what you paid for it, or double your money back. All persons dealing with matters of personal finance are advised to gather information from blogs, books, radio and TV, consult with professionals, discuss the matter with anybody who will listen, and then make their own decision. Because it’s their money.