News flash: Miami home prices crash another 2.7% (4.61 points) in one month vs. 2.2% in the previous month. Tampa prices were down 3% in one month. At this rate, we are in for a great year of price declines in 2009. I’m still expecting a full retracement to 1997 price levels (adjusted for inflation). CLICK FOR LARGER IMAGES.
Price declines from peak courtesy of Calculated Risk.
Explanation of the Case-Shiller methodology: The Case-Shiller index prices are measured monthly and tracks repeat sales of houses using a modified version of the weighted-repeat sales methodology proposed by Karl Case and Robert Shiller. This means that, to a large extent, it is able to adjust for the quality of the homes sold, unlike simple averages.
The Case-Shiller Index is much more accurate and valid than NAR data such as median home prices and average home prices.
Interesting. Lower prices appear to be bringing in buyers.
How long do you think it will take to get back to 1997 prices if you had to guess? 6 months, 1 year, 18months, 2 years or longer And why?
Never, unless you mean 1997 prices adjusted for inflation. In which case I give us 18 mos. to 2 years.
When I say retracement I mean adjusted for inflation, meaning the Case Shiller index is going back to ~80 on the inflation adjusted graph eventually (will take years). Nominally? Well, that depends on how much of that surging monetary base gets lent out. I’m thinking it is likely that we will see inflation eventually, but we might have another 4-6 good months of pure deflation. If this was to continue for 24 months with 33% real unemployment, we could see nominal 1997 levels. But again, that is unlikely….
I hope you are not using the monetary base as a basis for your forecast, because it has no effect on lending. The monetary base is the difference tax collections and government spending.
All you should really care about is that prices continue to fall 1-3% per month. As long as that continues you’re saving 5-15K per month. I think renting makes sense as long as we continue to see these kinds of falls. I’m on the lookout for inflation and so far, nothing…
I believe your Case-Shiller chart is nominal(not inflation adjusted). The price/rent ratio is more valid and optimistic:
http://1.bp.blogspot.com/_pMscxxELHEg/SaRAHfqdFDI/AAAAAAAAEnI/z0bKVMd2t3A/s1600-h/CDPriceRentCities2008.jpg
oops you’re right, tiered sales are inflation adjusted. Those price to rent ratios are wrong because BLS rents have not been adjusted downward. Rents in Miami are plummeting. Those price to rents may be more valid to you if you are a Realtor however. Why don’t you buy a $1 million condo that has been empty for 2 years and in a few months you tell us how that’s working out for you, if its cashflow positive, etc…
Hey…I’m on your side! I’m looking to buy a winter place in S. Florida(provided my dividends hold up(BIG proviso). So I’m happily riding the down escalator. I’m even happy that rents are falling too(if my dividends don’t hold up). It’s just that price/rent ratio is a most valid indicator of the remaining housing bubble.
You’re right, but even CR stated that BLS rents are slow to adjust downward in a recession. Also, I think the extent of overbuilding (the equivalent of 80 years construction in 9 years in downtown) will have a huge impact on rents in Miami. Just check out the sheer number of unrented MLS listings.
Try this:
http://www.calculatedriskblog.com/2009/02/house-prices-selected-cities.html
Okay adjusted for inflation the numbers are still too high. So there!
All talk and no action. Where are the decent cheap houses in Miami? Show me a single house in Coconut Grove, Miami Beach or Coral Gables which reflects SC index. I see more houses for sale for more money than the present owner paid year ago.
Who says flipping is dead! Realtors are still saying - offer more than the asking price!!!!!!
Well, you’ve got plenty of time….rents keep dropping.
Agreed. SFH prices are still way up there.
You have to look for foreclosures, thats where the deals can be had. But in the ‘better’ neighborhoods it is hard. Even if you do get a good deal in a ‘better’ neighborhood, your taxes and insurance will be like a second mortgage payment.
It looks like the inflation adjusted graph has returned to trend. I believe that bubbles overcorrect, but still…it looks like if you can buy below the average at this point, you’ll be close to the bottom.
Do you have this inflation adjusted index going back ten, twenty years? That would help identifying the trend.
There is absolutely no way this is the bottom. There is currently a negative CPI. This means that is prices don’t fall FAST ENOUGH then the inflation adjusted price goes up…ridiculous, CPI isn’t negative…food and my utility bills went up and stayed up. I don’t put much faith in the inflation adjusted chart or BLS stats for that matter. See my next post for more info.
When SC index reaches 90 or less for Miami - that will the bottom. Beware, the index may remain between 80 - 100 for few years.
BTW - that is 50% lower than present level.
If you re-read the above comments, at the beginning of Case Shiller Home Prices: Miami down 2.7%, Tampa down 3% last month | Miami Condo Forum, don’t you notice that you are arguing the same point but differently (I’m referring to bp quoteand therefore contradicting the main point and making this a lot less pertinent? I will come back next Saturday to see how this has evolved.