Sunday, October 4, 2009

CASE SHILLER REPORTS SIXTH STRAIGHT MONTH OF GAINS

I wouldn't pop the bubbly just yet, but we'll take good news where we can find it.


Case-Shiller reported this week that July housing prices in the report's 20-city composite index rose 1.6% between June and July, the sixth straight month of sustained improvement in the national survey.


On a year-over-year basis, Case-Shiller reports an overall decline in values of 13.3%, but a loss of just 2.9% in Denver.


While Case-Shiller's information is interesting (and gets plenty of media attention), it doesn't really tell you much about the market that exists today.


Because Case-Shiller is lumping all sales together into one statistical pie, it does not illustrate the radical disparity between the hyperactive, multiple-offer driven entry level and the credit-frozen, equity-losing high end of the market.


A Denver area seller or buyer at $200,000 is living in a completely different reality than a Denver area seller or buyer at $600,000. Below $200,000, many homes are appreciating (or more accurately, rebounding from previous losses) at 5 to 10% on an annualized basis. Above about $400,000, it's hard to find any neighborhood that isn't losing value.


So take the Case-Shiller report as good news, but don't get carried away. Show me continued improvement AFTER the $8,000 first-time buyer tax credit goes away, and then you'll have me on board the recovery bandwagon.