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Case Shiller September 2008

Case Shiller for September 2008 continued its downward trend.  The Portland index is down to 169.67 compared to August’s 171.93 and a high of 186.51 in July 2007.  September’s mark is at about the same level we had in March 2006 (169.87).  The index is down 9.0% from its high. The S&P500 index is down 25.2% from March 2006 – October 2008 (calculated here).

According to SFGATE:
“There wasn’t a good number in there, but these numbers don’t really
reflect what’s happening now,” said Patrick Newport, U.S. economist
with Englewood, Colo., consulting firm IHS Global Insight, noting that
the bad economic news began midway through September and has worsened
since. “We should expect really awful housing (data) for the rest of
the year.”

It continues:
Since May, Case-Shiller’s national monthly declines have rested
around or below 1 percent, leading some observers to speculate that the
markets were approaching a bottom several months ago. In Tuesday’s
report, the declines were 1.9 percent for the 10-city index and 1.8
percent for the 20-city index. The change isn’t large and could in part
reflect seasonal home-buying patterns, which typically slow down at the
end of summer, but isn’t good news in any case.

“The key point is we do not yet see a deceleration,” said Susan
Wachter, professor of real estate at the University of Pennsylvania’s
Wharton School of Business. “This is another historic decline and the
drivers are still pointing down.”

The October index is sure to fall further, she said. Beyond that,
the health of the housing sector will depend on how markets react to
government efforts like the $800 billion plan to loosen lending
announced Tuesday, as well as stimulus measures to come, she said.

Standard & Poor’s expects it will take at least until the middle
of next year before the housing market bottoms outs and until 2010
before prices begin to climb, Newport said.

 

15 Comments on “Case Shiller September 2008

  1. In order for the comparison to be useful to most people, it is essential to include the effects of leverage. After all, most homebuyers are highly leveraged. Perhaps you could make a table of “Case-Shiller returns” for a few downpayment scenarios.

    For a careful apples-to-apples comparison, one would also need to account for transaction costs for real estate vs. stock, as well as holding costs (mortgage interest payments, etc.) as well as the own-vs-rent difference in monthly costs. But these additional considerations quickly become very complicated.

  2. We should take a look at some ROI numbers depending how money was “invested” in either the real estate market or stock market. Dollar for dollar, real estate has done better but we should look at the results of having a leveraged position. I’ll work on that later.

  3. Leo is right, it is more complicated when you start trying to look at the complete picture. It may take some time to create.

    Squeezed is very astute.

    Happy Thanksgiving

  4. The market will bottom out sooner than later. I still see highly desirable properties are still being bought – now within 8 months (as opposed to longer).

  5. People who bought in NW PDX are up for the year, draining the 401k and buying a rental condo in the Pearl is an outstanding investment.

  6. “People who bought in NW PDX are up for the year, draining the 401k and buying a rental condo in the Pearl is an outstanding investment.”

    I am not sure whether this comment was sarcastic but either way its still quite funny.

  7. I am not sure if real estate for the purpose of occupying property should be considered an investment. Also, there are far to many factors; tax bracket, property risk factor, and more… I believe a buy or rent model is to generic for serious consideration.

  8. Markets are not investment vehicles only exchange mechanisms. Personal real estate to me, while a product exchanged through a market is a liability. However, I do view non-owner occupied real estate as an investment. That’s me and I do own both types. I treat my home as liability and the others as investment.

  9. You have X dollars. You can, among other things, decide to invest X in the stock market rent or buy a house using X.

    If housing and stocks are both markets (any argument there?), how putting money in to either not be considered an investment? Might not be a good one but…

  10. “The market will bottom out sooner than later.”

    I think you have this backwards, honey.

  11. “The market will bottom out sooner than later.”

    I think you have this backwards, honey.

    What do you mean by this and who are you referring to? What market? Do you mean a specific asset class? Why sooner rather than later? What does that mean? What is your time period?

  12. “I treat my home as liability.”

    Exactly.

    Residential real estate will remain a depreciating asset for many years. Historically, there were long periods where RRE appreciation failed to beat inflation.

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