Case-Shiller Aug. Numbers

Mpls. Leads 20-City Index with 3.2% Gain

According to Case-Shiller's August statistics, Minneapolis showed the best appreciation of 20 markets nationally, with a 3.2% increase (the raw number increased from 118.87 in July to 122.66 in August).

So what does that mean?

I don't put too much stock in it, for two reasons: 1) a one month snapshot is too short to be meaningful; and 2) I have issues with Case-Shiller's "sale pair" methodology.

Practicing, "boots-on-the-ground" Realtors form their opinion of the market not just from what's sold, but what's currently for sale -- and what's not selling.

My take, which has been consistent for several months now, is that we're experiencing a schizophrenic market: the low end, stimulated by bank foreclosures and the $8,000 tax credit, is quite strong (if not approaching overheated).

At the other end, upper bracket housing is suffering because prospective buyers of those homes are facing a one-two whammy of higher financing costs and stricken balance sheets.

So is it Bottoming??

May Case-Shiller Numbers: Is the Worst Over?

It's tough to make predictions, especially about the future.

--Yogi Berra

If I told you a stock that had been selling for $30 three years ago was now $20, and hadn't fallen any further in the last few months, could you confidently say that it had bottomed?

It would all depend, you'd say.

On the company's business prospects, competitive posture, service and product line(s), etc. Plus, the performance of the broader economy.

That's how I feel about forecasting housing prices from here.

Except that the applicable variables are things like (un)employment, GDP growth, interest rates, etc.

Tankers vs. Speed Boats

So, is it the bottom??

Consider this joke about CPA's:

When asked the color of a horse standing in a pasture, the CPA answered, "this side appears to be brown."

In that spirit, I'm prepared to say that, for now, the housing market appears to have bottomed.

P.S.: the best argument I'm aware of in favor of a housing bottom is that, unlike stocks, housing market cycles tend to be big, slow-turning affairs with lots of inertia. Think of it as tankers vs. speed boats.

May '09 Case-Shiller Stats

Market Snapshot: Case-Shiller vs. Ross Kaplan

According to the just-released S&P/Case-Shiller home-price index, Minneapolis home prices rose 1% in May. If you like raw statistics, the May number was 109.77, vs. 108.51 in April.

Notwithstanding the "scientific" ring of such precise numbers, my Realtor's, "boots-on-the-ground" take is that things are much more amorphous.

Here's what I can confidently report as of late July:

--the window for getting a great deal on a foreclosure is closed, at least for now. The supply is down dramatically, and anything priced below market routinely draws multiple offers, negating whatever discount there may have been.

--the top end of the Twin Cities market -- high six figures and above -- remains very soft, with supply approaching almost 3 years.

--Overall Twin Cities inventory has quietly shrunk, from a peak of 34,000 units, to about 23,000 units now. Given that a balanced market is high teens, and a Seller's market mid-teens or lower . . . downward price pressure has clearly abated. In other words, we're bottoming (I do believe the Case-Shiller numbers are correctly reflecting that).

--That said, the "wild card" now isn't supply, but demand. Specifically, stuff like wages, jobs, and consumer confidence. The Buyers I'm working with are pleasantly surprised by their choices, but still quite cautious.

As I've previously written on this blog, the "one-size-fits-all" approach to the local housing market obscures lots of nuances.