The US Housing Market - It's worse than you think


Published on

This presentation includes a look at both national and regional US housing market trends. Scott Sambucci examines several real-time and leading indicators. A look at the Case-Shiller Home Price Index and the effects of the 2009-10 US Housing Stimulus program is also included.

This presentation was part of a recording webcast. A video recording of the webcast is available at:

(Registration required)

Published in: Real Estate
1 Like
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide
  • “All markets are created equal…” – All markets have been affected by the housing market situation, however certain structural factors cause varied market betas.“Recovery Rates” - You should over-generalized a state, metro, or even a county’s market at your own peril. When you generalize, you’re going to be wrong.Opportunities – It’s not that you can always see good markets, but it’s discerning which are less bad, or which the appear stable are deteriorating quickly.
  • “independently calculated” – VERY IMPT. This means that we do not apply county or regional data to a set of underlying zip codes. All of our indicators are calculated and published based on the activity of the listings comprising that zip code.
  • If you have exposure to the housing market, our data and analytics matter to you.
  • If you joined up in the Spring for our “Early 2010 Indicators” webcast, we expressed caution going into the Spring season b/c prices remained stagnant through April 2010 compared to the sharp price increases we saw in 2009 at the introduction of the stimulus and declining inventory rates. Now…
  • Black line is National Inventory. Orange Line is median price.YoY Inventory is the same levels – 2010 vs. 2009, but headed in the wrong direction. Prices already hit their seasonal peak and did not reach last year’s peak. With seasonal effects and higher inventory, the start of 2011 is looking gloomy.
  • Price measures typically have momentum. In 2009, prices moved sharply higher quickly. In 2010, the weekly price index is moving lower faster with the peak at the stimulus expiration. This by itself is the most impressively bearish viewpoint on the market as of today.
  • A baseline leading indicator for us is the Price of New Listings. New sellers hitting the market price their homes based on local market activity. If homes are selling quickly and fetching good prices, new sellers will price a little higher. If their neighborhood activity is weak, they’ll price lower. Converged sharply this Spring by the newly-listed-to-currently-listed ratios didn’t reach the same percentages as Spring 2009, Spring 2008.Remember that 2010 prices were already lower than 2009, and this year’s new sellers entering market, are choosing to price more aggressively than in a normal Spring season. This forecasts lower future transaction prices.
  • So onto the Inventory story. Historically, Active Inventory CORR with the # of listings absorbed Generally sales rates go up with inventory rises. Until end of stimulus. We seeing a rapid divergence post-stimulus. Means more inventory is coming on to the market with fewer leaving. This is going to leave a larger and larger inventory overhang each month leading into 2011.
  • I’ve mentioned the stimulus a bit – so how do we measure it’s affects? Looking at the number
  • Big up slope here, moving higher sharply, even more so that in 2008More stable mkt = 25-33% is more common,; when <25%, then healthy; when >35%-40% (fragile), then we’re heading to troubled timesAnd we saw the impact on price stabilization starting early 2009.
  • This is a bad thing. Prices move lower, when supply rises. But at least it
  • While the lowinvnetorymight imply good news in the short run, we’d be better off letting it hit the market. You can see the effects of judicial states and long foreclsoure process. Price recovery is going to be longer term.And miami condos – worse of the worst – declining prices coinciding with lower inventory.
  • Rentals  Who lives there? The same people who defaulted on their mortgage. Investor buys and rents back. Demand and inventory rates, and here’s how we measure…. Next slide
  • MAI measures Demand relative to inventory: 2009 levels – moved higher, stayed higher, but in 2010, end of stimulus = falls off a cliff
  • As the lagging data catches up to the real-time market
  • Despite overall bearishness, there are some markets that have been resilient to inventory climbs, are in different stages of recovery, showed price buoyancy.The more local you get, the more volatileVital to get local b/c if you generalize (ie use Cty or MSA data), you’re going to be wrong.You know that trend matters, but are you using lagging data to trend or leading data
  • Modeling re-org  good opp to take a look at why’s missing in your model. Probably don’t have active inventory, you don’t % price reductions. These matter.I think everyone is expecting increased Bond/Whole Loan portfolios.Banks are dripping assets, visible with inventory rising (no one is selling b/c they’re happy with today’s prices). Short sale rules are mellowing, process improvements
  • ×