I am a housing bear, (and a stock bear, and bearish on a lot of things right now),
so it is tempting for me to point to the 9-percent, 3-month drop in median home prices
and declare “The housing collapse is upon us!!”
Still, I believe that right now the Case-Shiller index, which has dropped only 5% is probably a better reflection of most people’s situation.
I’ll let you now if I change my mind.
Okay, so,for now Case-Shiller in, media price out.
What does Case-Shiller tell us?
Probably the most interesting thing is that, so far, the drop in home prices this time is faster-steeper (more violent) than the drop in home prices last time.
IOW So far, the rate-of decline is greater than the rate-of-decline last time.
If the current rate-of-decline continues for 5.75 years (and I doubt it will),
byt that measure the total decline in home prices would be something like 48.5% this time, (vs 27% last time.) Wow. ikes. Run for the hills and learn togrow your own wheat.
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At some point in the past I decided the length of the green line below, (which is 2.5 years) is also very important and serves as a the best/only comparison we have.
I see no reason to change that now. So, it’s a thumbnail sketch, but in a dart-throwing sort of way, I can predict a total decline in home prices will actually be 15-20%.
Here is one measure that usually does not matter.
It usually does not matter because it usually does not last long.
The rate of change in home prices is declining at the fastest rate in modern history.
the slope of decline right now is greater than the slope of decline during the “housing” crisis of 2006-2008
Chart below is not Case-Shiller (as normally presented)
Chart below is the Y-o-Y change in Case-Shiller.
If things continue at this rate we are all in very deep doo doo.
I’d say it’s a long overdue correction.
Same Y-o-Y rate of change information as above
presented with arrows.
Again, this measure is not used very often and will matter if and only if the current rate of change continues for a protracted time. That is not the most-likely scenario.
Anyway, here it is.
Deja Vu in surround sound.
