Case-Shiller released seasonal worst month of year

The Case-Shiller data for January was just released. Normally, the fastest price drops of the year happen in this data set. Now, for Florida and maybe a few other places, it looks like February could be worse; but for most areas we expect slower price drops until November.

So expect your favorite Realtor (tm) organization to state how much the market is improving.

Since Calculated Risk does a much better job of documenting the big picture, I focus on the last 3 cities that held their Case-Shiller above 200: Los Angeles, Miami, and DC.
















I believe the derivative provides even more information than the absolute number. Notice the seasonality? The greatest drops are October-February. Suddenly for march the slope changes, pretty much every year and I do not expect an exception for 2009. However... I still expect the overall year to be negative. Loan rules keep being rewritten.

I also wonder when the black hole of 'off the market foreclosures' will be relesed. Sorry... but I know of too many people who haven't made a payment in 9+ months. When the time comes, they'll move back in with mom and dad. Too many bedrooms for too little income.


















What is it with journalists pointing that the price declines are easing in LA?!? A 2.87%/month price decline might be less than the peak of a year ago, but it points to a bottom in 2011, not even 2010!

Now I'll do a caviat. You could see miniscule price increases, per Case-Shiller in May-August. But... they will be given up in the winter.


e.g.:

yeahoo article













Oh, any price increases will require the job market to stop sucking. Do you think that will happen? Historically, the price bottom is about 12 to 18 months after the employment bottom (or when employment is starting to rise again).


Thankfully, unless there is a huge surprise to the downside, I think we're starting to come to the end of the worst of this recession. Now when are we going to fix the trade deficit? We have to (again, as we did for a little time under Reagan). By trade deficit I mean oil and goods (China). Not to mention, its going to be 7 years before easy credit rears its ugly head again (and it won't be as easy for 70+ years).

Got Popcorn?
Neil

Saturday Music

Mea culpa to all the blogs that started this trend years ago.

But I've been having too much fun watching bearish Youtube songs this morning.

You've got the Fed was a nice morning song:



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Neil

Data and regrets

I'm really regretting not recording the LA Times data from DQ news more often.

My only other snapshot is from July 2008.

http://www.dqnews.com/

Why? I'm comparing $/ft^2 both where I want to live and some 'interesting areas.'
I just captured the Febuary data.

Just a few zip codes of interest on home much the SFR $/ft^2 has dropped:

Lancaster 93534, 93535, 93536 are down 26%, 33%, and 22% respectively
Manhattan Beach 90266, is only down to $702/ft^2. (1% drop)
Malibu 90265 is down $501/ft^2 or a 22% drop
Palmdale 93550, 93551, 93552, 93591 are down 33%, 22%, 28%, and 49% respectively
Palos Verdes Pen (90275), down 3% (but very few sales, 7 SFR homes)
Pasadena 91101, 91103, 91104, 91105, 91106, 91107 is down 20%, 14%, UP 37% to $470/ft^2, and down 4%.
RPV 90275 is down to $410/ft^2! or down 18% from July! (My first choice zip to buy.)
Redondo Beach 90277, 90278 is down 5% and 19% (nicer area down more?!? Wait... only three 90277 sales in February...)
Torrance 90501, 90503, 90504, 90505 area mixed, down 6%, NO SALES, down 8%, and the last two are up 5%

There is much more. I really wish I had taken more data for I do not know the month to month variety (extreme due to low Febuary sales). I would also like to compare with February 2007, 2006, 2005 (ok, before I was blogging here).

What does this tell us? Not much. Without knowing normal month to month variation... I could be makign conclusions off 'noise.' But what about the price increases (numbers in bold above)? That is price increase per ft^2. I'm not sure what to make of it yet.

But RPV (90275, had only 12 Single family (SFR) sales and 4 condos in February with inventory of 148 to 153 during the month... (per snapshots by me of ziprealty inventory on 2/1/2009, 2/23, and 2/26). Hmmmm... 164 on the market today.

but 90274 is more interesting. 8 total sales (1 condo) and inventory of:
PVE: 98
Rolling hills 21
Roling Hills estates: 44

Hmmm... 163/8=20 months of inventory. Me thinks the great squish down continues...

Off topic:
I've secured my job, but I will be expected to travel 1/2 time. Certainly not the end of the world, just not my ideal. For example, my lunch today was spent holding my infant daughter on a pony saddle! She loved it. If I'm traveling, such events with 'Daddy' will happen less. One makes choices. Note: New efforts are being done to 'accomodate my preference' to spend more time at our main location. But spring and Summer (at a minimum) will be spent with a lot of road time.

Also, the wife likes the idea of a Macbook. I almost forgot I promised her that our next computer could be a Mac... 'Could be' is becoming 'will be.'

I'll take snapshots more often and I've added Ventura, Orange, Riverside and San Bernadeno counties (its all on the same web page, so why not).

I speculate we are in the last major year of decline. But are we? This doesn't mean rush to buy... (Its best to buy after the bottom.) Late edit: I have posted in the past that, for myself, its best to buy before the bottom for best inventory selection. I still believe this. But its tough to blog with advice for those *really* following and those just reading for the first time. But the trend will be interesting.

I'll restart my 'emotions' series after I travel for a bit more. So do not expect a February update. Overall, people are excited to buy. But I look at those Palmdale $/ft^2 that were once much higher and now are $43 to $94/ft^2. I'd swear I saw it break $300/ft^2, but I didn't save that snapshot of the data.

Oh... notice I never talked median price? Worthless statistic in my opinion.

Got Popcorn?
Neil

Wife to be laid off

We knew this was likely as she works for a bank.

My wife has received notice that she will be laid off in 5 weeks.
The severence package is... unbelievably fair. Over a year of pay
and benefits (minus 401k matching, serously the only cut!).

My job has also become far less secure. :(
Oh, I have an out. By 'volunteering' for a high travel assignment,
I secure my position for a while. (In negotiation, I only found out yesterday.)
My previous boss wants me back and I do not have enough supporters to be
'bullet proof' at headquarters. :( But it means a ton of time away from
my wife and daughter.

Kinda sucks after getting another awsome review
(but pay raises are tiny this year, my lowest ever).
But my skill set has gone from being in short supply to a surplus with layoffs and
a few individuals 'reading the tea leaves' and taking early retirement.

Thank God we didn't buy. Why?
1. Our little two bedroom cottage has low rent (for the area)
2. Lawn service is included
3. Its not that hard to clean
4. Down payment sitting in CD's. :)
5. We can *easily* rent on just one income.
6. We were living as if we had bought a place that cost $850k, money has been 'tight.' Now that is an 'artificial tight' as we were pocketing the
difference into our 'car and furniture fund.'

One of the reasons I haven't blogged as much is the nervousness that these
two events would happen. Now that they have... at least we know how to adapt.
Heck, after travel pay and benefits, we should save more in 2009/2010 than
any other year. But I do hate the travel and we'll have to hire a maid (I refuse to let my wife handle cleaning chemicals while breast feeding).
I did this travel for years and burned out on it.
I've only been off it for three months and did not wish to go back. But in this
economy, its not a time to be picky. At least I'm not burnt out on travel anymore.

Oh, this travel is why I felt so qualified to do the national emotions. I'll be back at it. All corners of the US. Sigh... Hawaii travels to visit us not vice versa.

Family has volunteered to help my wife while I'm away. In particular, there will
be four weeks I'll travel while she must work. ugh...

Oh, if you travel and like to read. Buy a Kindle. I LOVE it! My one splurge lately. What book are you in the mood for? I have over a dozen loaded and two of my favorite authors are about to release a number of books onto the Kindle. Warning: the available selection is much more limited than Amazon advertises. Tons of classics, but weak on releases over the last few years.

Got Popcorn?
Neil

ps (late edit): What laptops do you recommend? My personal one just overheated/fried and needs replacement (right after a FULL backup, no file losses). I'm looking for a *tiny* one
as when I travel its best to have computer for work and another for leisure. Why?
#1, work turns off the wireless (no free hotel Wifi).
#2, no installing software on the work computer (e.g., games, firefox, etc.)
#3 I often leave the work laptop 'on site' for file transfers.

I'm seriosly thinking Linux, but how is the photo editing and speadsheets now? When I last used Linux, I had to dual boot into Windows for those features.

What I need:
100GB+ of storage (huge photo collection, mostly of my daughter, that I will not do without)
2GB+ memory
Minimal games capability (I haven't bought a new game in 3 years... I play maybe
one hour per week, but its good R&R when frustrated.)
3+ hours of battery life.
Some ruggedness as travel is hard on a laptop.

I own an external DVD writter (USB), so I can do without that built in.

I'm willing to consider an Apple laptop too. I guess its time to read the reviews..
But then again, if I give up the games, the Kindle's internet access is just good enough (and I could buy a portable USB frame for photos). Decisions... Decisions...

Neil

Miss titled articles

Its spring and the NAR is publishing reports about how "its a great time to buy."

In this mistitled article I found an interesting quote:

Determined to remain in their homes, 72 percent of adults reduced spending in the past year in order to make monthly mortgage or rent payments, mostly by cutting discretionary spending such as vacations, entertainment and eating out. Regardless of age, most Americans are cutting spending back from some aspect of their life to pay housing costs, according to the survey.

But “It’s not all doom and gloom,” said Move, Inc., CEO Steve Berkowitz. “We found Americans are optimistic about homeownership despite concerns. They’re doing everything they can, from reducing discretionary spending to pay their mortgages, to planning to take advantage of the administration’s new program to stop foreclosures.”


Wow... that's a spin. (emphassis mine) Quite bluntly, people are waking up to the fact their home isn't affordable. The economy will not function if everything is being done to service debt.

Home sales are down at a normal level. What happens if they actually drop to a recessionary level?

Got Popcorn?
Neil

Retirements, interest rates, and home inventory

Companies are doing retirement buy out packages right now. Not great ones... but when you consider the low interest rates, people are able to cash out their pensions for large amounts.

What this is bringing to the table is home inventory. I congradulated a few people retiring this week. Its all the same story:

1. They already have their home in escrow (to sell) in the 'beach cities.' This is *before* commiting to retire.
2. They are retiring to already owned (mortgaged?) property outside of the 'urban zones.' (Either on water or on a mountain with a spectacular view.)
3. Cash out of the pension
4. Large stock market losses (forcing sale of urban 'work area' home)

All wish they could have sold for the $250k more of 2006. But all realize now is the time to move on.

Oh... I know more than a few companies where these workers will be 'unemployed.'

Interesting consequence of low interest rates (home will sell, pension cashes out for more). But what does this do for the company (Due to the pension benefit hit)?

I'd imagine similar effects are going to hold true with government workers. (Sans pension cash out.) Has the government tried to help the retirement scenario in order to make the layoff scenario less scary?

Side note: Multiple of these retirees were considering buying a downsided place (e.g., a condo) in the beach cities of LA to 'keep in touch' with friends. More than one has realized:

1. Large boats are cheap today $30k for the floating condo!
2. Slips are available (rare for LA) and the fees are reasonable.

Got Popcorn?
Neil