December Case-Shiller Numbers

December S&P/Case-Shiller:
Minneapolis Down 18.5%

The latest S&P/Case Shiller numbers (for December) are out, and to no one's surprise, they're dreadful: all of the nation's 20 largest housing markets show decreases, from the merely bad (Dallas, Denver) to the shocking (Las Vegas, Phoenix).

Minneapolis shows an 18.5% drop from a year earlier.

Before you jump to the conclusion that this is dramatic new evidence of market deterioration, keep in mind two things:

One. Case-Shiller is a month behind other housing statistics. Locally, the Board of Realtors is already reporting January sales activity.

Two. Foreclosures are now dominating sales activity in many markets nationally, including the Twin Cities.

Foreclosure are not exactly known for being in pristine condition, or located in the toniest neighborhoods.

As I've blogged previously (yes, it's turned into a verb, like "Google"), when consumers all switch to buying $1.89 gallons of milk at Wal-Mart from $3.49 gallons at "Deluxe Groceries," it doesn't mean that the price of milk has dropped 46%. Rather, the product mix has changed.

That's equally true in today's housing market.