Portland Real Estate Blog

When we talk about the Standard and Poor’s Case Shiller Index we are most often talking about the National index (there are 10 and 20 city composite indices) or the Portland index from the Home Price Value report (as I wrote yesterday).  Case Shiller also publishes a more targeted report which breaks each reported MSA into three tiers:

S&P Indices publishes supplemental tiered price data for 17 of the metro areas it covers. Tier breakpoints – price levels that divide recent sale prices in each market into thirds – are calculated for the period covered by the latest, most up-to-date index points. A closer look at these data shows, as was the case with aggregate home prices, that MSAs did not behave the same across and within tiers.

In Portland, Low Tier houses had the highest increase since 2000 and has remained higher than the other tiers.  In both San Francisco and Atlanta, the Low Tier had the highest (or close to) peak but now lag behind the Mid and High Tiers and the Aggregate.

The monthly Case Shiller report (what is Case Shiller?)was released yesterday for December 2009.  Standard and Poor’s website was having server problems yesterday and the report was unavailable for some of the day.  Portland’s real estate market ended the year flat with a slight drop to 149.95 from November’s 150.38.  The questions we can’t quite answer are 1) are we looking at the bottom in April/May and 2) is Portland starting to trend with the national market?  It has oft been said, accurately, that Portland lags about a year behind the national market.

I expect we’ll see continued seasonal increased activity and a push to come inside of the $8000 First Time Home Buyer Credit and $6500 Buyer Credit’s April 30th deadline with the assumption that it will not be extended (again).  If the Credit is not extended, we won’t have a clearer picture of whether the market can support itself until the end of summer.

The Case Shiller real estate report was released this morning for November 2009. Overall, results were mixed with relatively small gains and losses nationally. Portland’s Case Shiller Index is now 150.38, up half a point from October’s 149.88. Only five of the twenty tracked markets saw gains. Four cities hit new lows in the last four years of reporting. Portland’s low was 146.85 in April. Portland’s current index puts prices at July 2005 levels.

The following graph just show Seattle and Portland’s Case Shiller Index since January 2004.

Death, taxes and Case Shiller on the last Tuesday of the month. Pretty much like clockwork but the Case Shiller Index for Portland, and other markets, hasn’t been quite as painful as the first two in recent months. The Portland real estate market remains flat, posting a .1% loss from September.

The Portland Case Shiller Index is at 149.88 [note the report lags three months so this is through September]. This represents a 49.88% increase in value from January 2000 when the Index was set to 100. The Index tracks 20 cities and Portland’s appreciation ranks sixth since then. Washington (179.71), New York (175.01) and Los Angeles (168.43) lead the way with Detroit bringing up the rear at 73.97. Detroit is the only city ranked in double digits; #19 Las Vegas is 104.70. Case Shiller reminds us: “Data presented in the spreadsheets are calculated monthly using a three-month moving average and published with a two month lag.”

As reported earlier this morning, Case Shiller’s housing market data is now available.

These graphs show a selection of real estate markets, primarily on the west coast. The top one starts in January 2003.  The lower expands out 2009. Portland is the thick line in both graphs.  Miami hit 280.87 in December 2006.  At that time, Detroit was at 119.51, a 161.36 point difference.  Today, those locations are at 149.69 and 72.9 respectively, a 77.2 point drop.  Portland peaked in July 2007 at 186.51 and is now 149.72.

Yesterday I took some data from RMLS Market Action to see if it gave any indicator of what today’s Case Shiller report would look like and also reposted two articles written in advance of today’s report.  Nothing stood out from the graphs but one comment reminds us about the difference in methodology.  This links to Case Shiller’s methodology.

It’s 6:15 AM and the report is not posted on the Standard & Poor’s website so I’m going to go make another cup of coffee…

…The press release is online now but the spreadsheet data is not.  Portland’s housing market  took a slight dip, along with about half of the markets reported in the Index.  149.72 is .5% off August’s reported level.  Overall the national real estate market continued to climb.

I’ll post this now and come back later with some graphs.

News outlets are buzzing in advance of tomorrow’s Case Shiller report:

Reuters:

* What: S&P/Case-Shiller September home prices indexes
* When: Tuesday, Nov. 24, 9 a.m. (1400 GMT)
* Economists’ median forecast: +0.8 pct for 20-city index
-9.0 pct yr-over-yr 20-city

NEW YORK, Nov 23 (Reuters) – U.S. home prices likely rose
in September for the fifth straight month, trimming the year’s
losses, a Reuters survey on the Standard & Poor’s/Case-Shiller
indexes found…

Diana Olick at MSNBC this to say about  Case Shiller report:

As you probably could have guessed, I’m not going to jump on the bandwagon and say that the housing market is all fine and dandy now that we’ve seen two months of big jumps in existing home sales.

In fact, that bandwagon isn’t all that crowded; a lot of the housing cronies are saying that this big surge is all about the first time home buyer tax credit, which was originally supposed to expire November 30th but was then extended to closings by June 30th. The numbers today represent buyers who weren’t banking on the extension. Now that demand has been pulled forward so much, we are going to see a falloff after one more monthly reading…

Portland’s numbers in tomorrow’s post.

The Case Shiller Index is released on the last Tuesday of each month (tomorrow).  The Index has a three month lag; tomorrow’s report will tell us about September.  RMLS Market Action comes out midway through the following month; we already have data through October.  Without a massive amount of statistics, does RMLS Market Data predict what the Case Shiller Index for the Portland real estate market look like?  I don’t think so.

The graph ab0ve with inventory levels makes the average sales price and Case Shiller Index (for Portland) hard to discern so the graph below removes inventory but is the same otherwise.

Case Shiller for August reports that the Portland housing market is up from July but not by much and behind the national average.  Portland increased from was up .40 points to 150.4.  The national 20 city index was up 2.3 points.

The Portland real estate market has risen 3.61 points since its low in April.

More later.

Are we looking back at the bottom?  Who knows?  After peaking in July 2006, the Portland housing market dropped nearly 40 points by April of this year.  May offered a minimal bump, June added one point and July added two more to get Portland back to 150.06.  There is a three month lag in available data.

Will Congress extend, expand or let  the First Time Buyer Credit expire?

NAR says it added 350,000 sales but others point out that it was at a cost of over $40,000 per each additional sale.

What will stimulate the middle portion of the Portland real estate market?

Sales between $500,000-$800,000 are still stuck in a rut.  I’d be more likely to support something that addresses this segment of the market specifically (sure there are first time buyers in this segment but they are the exception).  If Congress is going to expand, I’d propose adding those that sell and buy a primary residence  using similar time frames as a 1031 Exchange as the qualifier (45 days to identify, six months to close) to the Credit.   Jumbo loan availability will also help.

The debate is real.  You have to be able to pay for these programs.  You could add caveats or open it up in any number of ways.  For now, we have to assume the first time buyers will have to close by November 30th to get the $8000 First Time Buyer Credit.