The April Case-Shiller release shows that home prices in the Miami market increased .6% during the month of February and .8% for the 12 months ended in February 2012. This was the third consecutive month of increases in the Miami market.
The Tampa index hit a new post-crash low during February with prices dropping .2% during the month of February and 2.9% for the 12 months ended February 2012. The Tampa index has lost ground for the past 7 months in a row.
Both Florida markets performed better than the national indices. The 20 market index dropped .8% for the month and is now down 3.5% for the past 12 months.
The worst performing market was Atlanta at down 2.9% on the month and a staggering 17.3% over the past 12 months. Atlanta is now chasing Detroit for the lowest index. The Atlanta CS index stands at 83.3(home prices are 16.7% less than prices at January 1, 2000) while the Detroit index stands at 68.8.
The Phoenix market showed the largest increase at up 1.2% for the month and up 3.3% for the past 12 months.
The Case Shiller results for January were released on Tuesday March 27th. Of the 20 markets followed, three showed prices increasing from December 2011, one market showed no change, and 16 markets showed price declines during the month.
Markets increasing or flat were Phoenix, Washington DC, Miami, and Charlotte. The best performing market for the month was Phoenix at up .9% from December 2011. The worst performing markets were Atlanta and Portland (OR) both down 2.1% during the month. The Florida markets were mixed with Miami up .6% while Tampa was down .8%.
On a year-over-year basis, only Phoenix, Denver, and Detroit showed increases from January 2011. The other 17 markets declined during the year. The best performing market for the past 12 months was Detroit at up 1.7% for the year. The worst performing market over the past 12 months was Atlanta at down 14.8%. The Miami and Tampa markets were down 1.9% and 3.8%, respectively over the past 12 months.
There is a 2 month lag between the data and the release. Furthermore, each release is an average of the prior 3 months results. The Indices are therefore slow moving and lag real time by several months. You will notice that there are abundant articles now on the internet that point to rising or at least stable home prices. Locally and anecdotally that seems to be the case here, especially in the more desirable areas.
I'll write more on this later but for now, good news. Every single market tracked by Case-Shiller showed an increase in their index over last month. Both the 20 market and 10 market composite indices were up 1.1%. Tampa was up 1.3% which erased most of the losses incurred in 2011 up to this point. Miami was up .6%.
Even lowly Detroit managed to move ahead for the first time in nearlly a generation, gaining 2.2% which put its prices back to where the were about 30 minutes ago. Actually it moved them back to where they were in March 2011.The index for Detroit is now at 65.42 or 65% of the 2000 price level. The last time the index was at this low (except for the months of April and May of this year) was May 1994.
Not only did Detroit perform well but, every market in the Midwest made out well. Minneapolis and Chicago were both up 3.2%, Cleveland up 1.5%.
If there was a slow area, it was the West and Northwest. Phoenix and La were both up just .3%, San Diego up .2%, San Francisco up .4%, Las Vegas up .1% Portland was just over flat, and Seattle was up .7%. The only big hitter in the West was Denver up 1.7%.
You can read the S&P's press release and analysis here.
......And Detroit and Las Vegas, or so says this month’s Case-Shiller report. The Tampa market was down .6% for the month (May), down 4.2% so far this year, and down 9.5% in the last 12 months. The only other Florida market tracked, Miami, increased 1.2% for the month. That brought the current year loss in Miami down to just 3.2% and the past 12 month loss down to 5.3%. As a reminder, Sarasota and Manatee Counties are not included in either index. You can read the S&P press release here.
I’ve already mentioned the 3 markets that lost ground (Tampa, Detroit, and Las Vegas). The biggest loser was Detroit at down 2.8% for the month and 8.9% year to date. Home prices in Detroit are just an amazing 62% of what they were in January 2000. Over the past 11 and half years, home prices in Detroit have declined nearly 38%.
The biggest winner for the month was Minneapolis at plus 2.6% which barely beat out Washington DC at plus 2.4%.
Minneapolis needed a big month as it was and is still leading the pack in losses over the past 12 months at down 11.7%. Tampa and Phoenix were tied for the third worst results over the past 12 months, both down 9.5%.
The best performing market over the past 12 months, as always, was Washington DC at plus 1.1% (your tax dollars at work). In fact, it is the only market that made any gains at all over the past 12 months.
If the results are due to inventory declines, as in our market, then you would expect the trend to continue for a while.
The Case-Shiller Home Price Indices for April were released yesterday. The indices increased in most markets along with the 10 market and 20 market composite indices. Tampa and Miami, the only two Florida markets tracked by Case-Shiller were 2 of the 7 markets that decreased from March (with 13 markets showing increases). The Tampa market was down .4% from March and is now 7.7% down from last year. Miami was down .2% in April and is down 5.6% from this time last year. Prices in both markets are roughly back to the summer of 2002.
Other, non-Florida markets declining during April were Boston, Charlotte, Chicago, Detroit (down 2.9% for the month alone), and Las Vegas. The biggest gainer was Washington DC ( up 3% for the month-your tax dollars are having an effect). DC is also the only market to have a year-over-year increase (up 4% over this time last year). The worst performing market in the past 12 months has been Minneapolis (down 11.1%).
The index values for Las Vegas, Cleveland, and Detroit are currently 97.69, 96.47, and 62.74. This means that all three of these markets have completely given up all gains made since January 2000. Prices in Detroit are less than 2/3 of their January 2000 level.
As with last month, there are statements in the analysis that accompanies the release of the indices that may make you think that our market is different than the rest of the country. For example, the analyst states that “Existing home sales rose in May, but are still 15% below last year’s pace and about 35% below their 2005 pace”. That’s clearly not the case in Sarasota and not exactly true in Manatee County. Sarasota single family home sales in 2011 are actually .3% AHEAD of the 2010 pace of 5,991 home sales. This will put them just 7% behind 2005 and nowhere near the lows which occurred in 2007 when just 3,921 homes sold.
In Manatee County, sales this year are 9% AHEAD of the 2010 pace. In 2010, a total of 3,966 homes sold in Manatee County. If the current trend continues, then 2011 should see nearly 4,400 home sales. Manatee home sales in 2005 were 5,697. So even with the 4,400 potential sales this year, 2011 will still be 23% below 2005. However, we will never get to 2005 levels this year simply because we don’t have enough inventory to do so. Still is should be well above the floor in 2008 when just 3,363 homes sold.
Another quote in the analysis is that “Single family housing starts were up in May but still well below their 2010 levels and still very close to their 30 year lows. Well, read
this about Lakewood Ranch. Lakewood Ranch has to account for the lion’s share of new construction activity in Manatee County if not both counties combined. According to the article, in 2011 420 new homes are predicted to sell which will be the best year for new construction sales since 2006 (when 650 homes sold). While 440 homes is still about 1/3 under the 2006 levels and 46% under the all time high of 750 sales that occurred in 2004, it is nowhere near the floor that occurred in 2009 when just 120 new homes sold.
I'll have more on this at a later date, but the S&P Case-Shiller numbers released today were down slightly from last month. The 20 Market Composite index was down .8% over February, Miami was down .8% as well, and Tampa was down .7%
In his analysis of this month's report, David Blitzer, Chairman of the Index Committee at S&P indices, said that this decline was the last straw and declared that the US housing economy was now in a double dip recession. Those words aren't verbatim but the point is the same. In fact, he did say "Home prices continue on their downward spiral with no relief in sight."
I don't know how weighting figures into the calculation of the indices but sometimes I can't help but think, for example, if Smith hadn't negotiated such a great deal with Jones on the sale of his Bayshore Blvd mansion in Tampa, would the index have increased by .1% instead of falling .7%. And if this same situation had played out over another 19 markets, would Mr. Blitzer have declared and end to the recession.
Read the full report here. More on the index results later.
After 4 months of increases that ended in July 2010, most of the Case-Shiller indices have now dropped for 7 consecutive months. Both the Tampa and Miami indices are at post-boom lows, erasing all the gains posted during last summer plus some. The 20 market national composite is .01 point above its low.
During February 2011, every market except Detroit of all places reported decreases (even Washington DC declined .1%) from the previous month. Tampa dropped 1.2% and Miami was one of 4 markets to drop 2% or more. Compared to February 2010, the Tampa and Miami markets have declined 6.0% and 6.2%, respectively.
Looking at the changes since the indices turned in July, the West and Midwest are certainly having a harder time than the rest of the country. The 2 worst performing markets during this period have been Chicago (down 10.2%) and Minneapolis (down 13.3%). The next tier is Seattle, Portland, San Francisco, and Atlanta (an exception ) all of which are down between 9 and 10 percent during the past 7 months. Tampa and Miami were down 7.1% and 6.4%, respectively, during this period.
In the press release that accompanied the release of this month’s Case-Shiller numbers, the analyst cited several factors that supposedly contributed to the poor results and, in the opinion of the analyst, meant that we were in for a long (or presumably longer) recovery. Those factors were:
- Existing home sales (they are slow nationally)
- New Home Starts (close to lows)
- Foreclosure Activity/Mortgage delinquencies (near highs)
- Unemployment (down but still high)
If these are the most important factors affecting home prices then the prospects for our local market looks much better than the national market. First, for Sarasota, home sales (condos and single family) for the past 12 months have exceeded every year back to 2005. In fact, Sarasota County single family home sales in the past 12 months were only 5% of 2005 levels. The numbers are much the same for Manatee County except that single family home sales did not surpass the 2006 sales. I don’t know if either county will ever beat 2004 or 2005 results just given all of the new construction sales during that period (many of which sold more than once before the home was even completed).
As for new home starts, I am working on a post for that and do not have any specifics on local housing starts at this time. However, I will say that, in the past year, Pat Neal has constructed a small town in the Central Park section of Lakewood Ranch. Similarly, the other great Lakewood Ranch builders have been on a tear in the new Country Club East section Lakewood Ranch. Builders can now build a new home that competes nicely with the average short sale or foreclosure. 2010 for housing starts in the area must look just like resales – I’d bet it was the biggest year since 2006 if not 2005.
As for foreclosure activity, read my market recap here – the short version is that there is very little distressed inventory remaining. For the past 2 years, sites like RealtyTrac have been warning of the next big wave and we are still waiting. The press release also says that the mortgage delinquency is near historic highs. If you look at the S&P/Experian Credit Default Indices you will see that defaults (different than delinquent) are high but rapidly declining. Read my earlier post on this topic.
The only real bad and irrefutable factor is unemployment. Even though much of the SW Florida Real estate market is driven by retirees or soon to be retirees, we still need low unemployment to thrive, especially in the Midwest and Northeast. The perceived ability to sell the northern homestead often plays a big role in the decision making process here – whether to buy at all or how much to spend.
The Case-Shiller home price indices for January released last month (click here to read my post) were not the best news in the world for those hoping for a sign that the market might be turning. Every market was either down or flat compared to the prior month and the same month in 2010. This only added to the bad news released the week before that harped on the fact that February 2011 was a record low for new home sales. Also mentioned was how the slowdown in the foreclosure process was going to create a significant amount of “shadow inventory” ultimately flooding the market with more distressed inventory.
With these to data points, the media was abuzz with articles on a double dip (i.e. another prolonged period of decreasing prices) in the housing market. I don’t dispute any of the facts quoted in the articles, but I don’t think they necessarily point to the apocalyptic market collapse that most of the articles suggest, especially here in downtown Sarasota.
In fact, here are my top 5 signs that the market is closer to rebound than collapse.
5. Unemployment nationally, while still annoyingly high, has at least dropped below 9%. Say what you want about how the statistic has been artificially reduced by people leaving the workforce permanently or the fact that it does not reflect under employment (people accepting jobs at salaries significantly less than their prior job), at least the statistic is dropping. Also for the record, I think the national UE rate more important to the downtown market than the local rate, given the profile of the typical downtown condo buyer. Most aren't counting employment income from Sarasota County. If anything, potential buyers are counting on someone in the northeast or midwest buying their primary residence in the north.
4. With regard to the Case-Shiller results, you could argue that we are already in a double dip. Prices started moving up and now they are moving down again. However, I see this as more of the bottoming process than a sign that we are nearing an abyss. Whether you are talking stocks, commodities or real estate, markets rarely go straight back up after crashing. They chop around for awhile moving up and down before making any sort of a meaningful move in any direction. If you asked industry experts two years ago what the bottom would look like, most would say it would look like we have now.
3. Credit related stats are improving. This hasn’t been reported at all, but the S&P/Experian Consumer Credit Default Indices on every type of consumer debt are falling and are now actually back to near pre-recession levels. The weighted average composite index is now at 2.54, back to the December 2007 level. This index ranged between 1.32 and 1.60 during the boom days of 2005, and did not break above 1.60 until March 2007. It peaked in May 2009 at 5.51.
2. There are very few bank owned and pre-foreclosure units in downtown. The chart below shows distressed property information by building for the newer buildings in downtown. There are only 3 remaining bank owned units in this group and a total of 12 listings in MLS that are distressed properties. There are 43 properties with foreclosure notices filed against them but even this larger number is less than 4% of the total. Given that , in 2010, 28% of all condo sales in all of Sarasota County were distressed sales, 4% seems trivial.
1. The levels of unsold condos in downtown Sarasota continue to fall. At the end of March 2011, there were only 301 condos listed for sale in ZIP code 34236, 20% fewer than at March 2010. In fact, you have to go back to December of 2002 to find a point when there were fewer condos on the market. As you can see from this post, the relationship between sales and inventory is still not great and will keep pressure on prices (over a years' supply of inventory). But ever-decreasing inventories is, to me, the biggest sign that things are getting better, not worse.
A final note about the resilience of this market
Currently, the Sarasota County Property Appraiser site indicates that there are 3,710 condo residences in just the downtown section of ZIP code 34236 (i.e excluding Lido). Of those units 989 were constructed in 2004 or earlier. This means that in the 6 and a quarter years between January 2005 and today, the downtown market absorbed 989 newly constructed residences (roughly 36% of the January 2005 base). Those 989 unit sales represent more than 3 years worth of 2010 sales.
Additionally, during this 6.25 year time frame, all of the resales from the new units and base units were aborbed by the market such that by April 2011, the level of unsold inventory was back below the Janauary 2004 levels - in fact is only about 75% of the January 2004 level. And only about 2% of the inventory remaining is distressed.
Even more impressive is that this all occured during the rockiest period for real estate since the Florida land bust in the 1920's.
The January indices (released March 28.2011) were down or flat from December in every market. Both Florida markets followed were down 1% from December.
Compared to the January 2010 indices, all markets were down except for San Diego which was flat and Washington DC which was up 4% (see my post from last month on this topic).
Like politics, all real estate is local. There is no Case-Shiller index for Sarasota, but over the long-term (one year or more), the charts for Tampa and Miami are probably reasonable proxy for Sarasota or even the downtown condo market. However, I do think things have firmed up more downtown recently.
As posted last month, unsold inventory levels in the downtown Sarasota condo market are at 5 year lows and sales are back to near highs. The relationship between sales and inventory remains low which will put pressure on prices, but the relationship has improved dramatically over the past year. It won't be long until inventory becomes picked over with the unsold inventory becoming the units with the least desirable views in the least popular buildings. When this starts to occur, new listings with the better views in the more popular buildings will start to move quickly. We can't be far from this point.
The S&P/Case-Shiller results for December 2010 were released last week (2 month lag). The both the 10 and 20 market national composite indices declined versus November (down .9% and 1.0%, respectively), along with 19 of the 20 markets tracked by the Indices. The only market to increase, strangely enough, was Washington DC, which gained .3% over November. Miami lost .5% while Tampa showed the largest percentage drop of all markets losing a whopping 2.6% compared to November. In fact, the December decline represents about 45% of the entire year’s 6.2% drop for Tampa.
For all of 2010, the 20 market national composite lost 2.4%. The Miami market dropped 3.7% and, as already mentioned, Tampa dropped 6.2%. The worst performing markets were Atlanta (-8.0%), Phoenix (-8.3%), and Detroit (-9.1%). The best performing markets for 2010 were LA (-.2%), San Diego (+1.7%), and, amazingly, Washington DC (+4.1%).
As you may know, the Case-Shiller Indices are calculated such that January 2000 is equal to 100. So the change from year 2000 to any period is easily calculated by dividing the change in the current index by 100. For example, if the current index is 125, then the index has appreciated 25% since January 2000. If the index is 90, then it has depreciated 10% since January 2000. So, with the most recent report being the end of a year, let’s see how prices have changed over the past 11 years.
For the Miami market, the December index is 143.11 which implies that home prices have increased 43.11% in Miami since Janyuary 2000. The Tampa index stands at 130.23 similarly impling that home prices in that market have increased only 30.23% over the past 11 years (not withstanding the fact that in June 2006 the index was 238 which means that prices had risen 138% in 6.5 years). The 20 market national composite is 142.42.
The markets with the worst 11 year cumulative record (i.e. with the lowest December 2010 indices) are Cleveland (99.7 or basically unchanged since January 2000), Las Vegas (99.48 also essentially back to January 2000 price levels), and Detroit (65.93 which means home prices have lost about one third of their value over the past 11 years).
Those markets showing the best appreciation (with the highest December 2010 indices) are San Diego (158.9 or 58.9% increase in the past 11 years), LA (170.9 or a 70.9% increase in the past 11 years), and the gold medal winner, Washington DC (186.1 or an 86.1% increase over the past 11 years).
Most people will tell you that the two biggest drivers of home prices are personal income and population growth. So….. how could Washington DC outstrip every other market in the country, most soundly so?
To answer the question raised in the title of the article, I think the only concrete thing we have to show for our $12 trillion national debt is a thriving residential real estate market in DC.