Case and Shiller and a little bit about the Scripps Ranch housing market

Try as I might, I just can’t get excited about the latest Case-Shiller Home Price Indices report.  Sure, a 4% year-over-year decline looks ugly at first blush, but it comes as no surprise. We have talked ourselves blue in the face here about the artificial price bump we enjoyed last year at the hands of the tax credit fairies.

Granted, a 0.4% increase in prices from March to April beats a poke in the eye and sounds downright upbeat (particularly if you forget seasonal factors and the fact that 0.4% is a smaller number than the Minute Waltz).

From Forbes today (and I agree, by the way):

As for the housing market and what home prices are doing nationally right now, Clear Capital, Zillow and Case-Shiller are all saying generally the same thing, despite offering slightly conflicting home price numbers.  The home buyer tax credits pushed prices up a bit in 2009 through 2010. When they expired, prices dropped down past 2009 lows in response during fall and winter.  After a rough start to the high selling season of spring and summer, due to weather and other outside variables, that price drop is slowing down and stabilizing.  You can expect prices to drop further this year, but those drops will be less dramatic than we have seen in the past. A housing market recovery will come, but we’re anywhere from a year to three years off. In the meantime, we are close to or bouncing along the bottom in most markets.

That’s my own emphasis there, because it’s my blog and I can emphasize whenever I feel like it. Plus, I think the assessment is spot-on.

While we are on the subject of market trends, here is what happened in the past 30 days in Scripps Ranch. Granted, there is no logical segue between the latest Case-Shiller goings-on and my little 92131 snap shot – except maybe that both involve numbers. At least my data isn’t 60 days old.

Keep in mind a couple of things:

  1. The sold home samples are smaller than small. In the past 30 days, only 19 detached and 8 attached homes have sold in the 92131 Zip code. (The active listings stand at 113 and 60 respectively.
  2. This information is deemed reliable but not guaranteed. In other words, I grabbed it directly from the Sandicor Multiple Listing Service over my lunch break, and it is subject to human error. (By “human,” I mean me.)

So what’s this mean? It’s subject to interpretation, of course. Here’s mine. For detached homes, there is a big difference (approximately a 15% spread) between the median prices of what is listed and what folks are buying. It’s an affordability thing. And a loan qualification thing. Interesting, though, that the spread when you consider price per square foot is much less (a paltry approximate 2%). My guess is because when people buy the more affordable homes, they are generally buying the smaller homes, and price per square foot typically goes up as size goes down.

In the case of attached homes, the price spread is much less (roughly 5%), not far off the difference in list versus sale price per square foot (approximately 4%). Where condos are concerned, you don’t have as wide a size swing among products, which may explain why these numbers tend to track. At least that’s my story, and I am sticking to it.

One more fun fact, and then you are free to go watch paint dry somewhere else. Just over half of the active listings and slightly less than half of the detached listings have undergone price reductions. As I have written before, when these homes get to within 3 to 5% of the market’s perceived value they will become a sold statistic, but rarely sooner.

(Before I could hit “publish,” Zillow’s Stan Humphries posted this fabulous Case-Shiller rant. If you are a fan of the stats, it’s a good read.)

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