Basically, the CME futures contracts are point to moderate price drops ahead in LA, DC, and quite a few other markets.
WSJ ON HOME PRICES
I think we'll see bigger price drips due to the impacts of the credit crunch and overbuilding. If LA drops less than 45%, quite a few industries are "priced out forever." Let's see how they adapt.
Got popcorn?
Neil
2 comments:
Neil,
How about a primer on how Case-Shiller arrives at it calculations. For example, I belive it excludes homes that have unusual price gains (indicating major improvements or even tear down/replacement). But how can it recognize, for example, the new kitchen? If the owner completed $150,000 of upgrades, then sells for the same price in two years, CS cannot recognize this, can it. Therefore, it would seem the CS probably understates declines. Or, perhaps it makes some type of adjustment?
Anon,
Case-Shiller uses permits to guess the level of the retrofit. For example, my folks remodeled their house and pulled permits for the electrical work. Thus estimates are done. Since what matters is how the region does, the goal is a best guess. I'm not sure if more is done, but its the most accurate out there.
Got popcorn?
Neil
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