Once again the media is breathlessly reporting the results of today’s S&P/ Case-Shiller data, which details ongoing price declines in “every region of the country”.  The 10-City Index is down 16.3% year-over-year and the 20-City Index is down 15.3% year-over-year. 

Not mentioned in the vast predominance of the news bytes being served today is the fact that 8 of the cities in the 20-City Index showed growth March to April:  Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Portland, and Seattle; Charlotte and Dallas are the only two in the Index to show two consecutive months of month-to-month growth. 

We’ve been rather frank over the past several months is our criticism of how the media typically misrepresents the Case-Shiller data, leaning of course to a doom and gloom perspective.  Here’s an example headline quote from the lead story this morning on CNN’s news web portal:  “U.S. home prices posted record declines in April, continuing a long losing streak for U.S. home prices.”  The CNN article neglects to mention that several markets followed in the Case-Shiller data reflected gains this month. 

There’s always something interesting to take from the Case-Shiller reporting, and here’s our spin on today’s information.  Year-over-year losses reported today are impressive, but in all reasonable probability are necessary corrections to restore affordability.  We continue to opine that affordability is one of the key fundamentals that must be restored in order to begin to define “the bottom” in any regional market.  Has “the bottom” been reached in several of the markets listed above where price gains were noted?  Time will tell, but there’s no question from speaking with investors and brokers around the country that things have begun to pick up steam over the past four or so weeks in many areas.  (Try to “time the bottom” is in our opinion a fool’s game - following the objective fundamentals in a market on the other hand will lead investors to markets with the greatest potential.)

As always we’ll continue to argue that in reality a national housing market doesn’t exist given the astounding regional and market to market variations that persist today;  emerging markets investors understand that markets progress through cycles, and that the cycles are not necessarily in phase from market to market.  No doubt there are markets due for much greater correction and pain yet to endure, and in fact there are many more markets that are still over-valued and due to correct than there are markets that are improving now.  But indeed there are markets that are improving now, and there are more of them than even two months ago. 

Harvard’s State of the Nation’s Housing Report was released yesterday to great fanfare though revealing little if any information that has not been discussed in other venues.  The report is lengthy (here’s a link to their download page) but worth a glance if you haven’t already.  They did prepare some excellent graphics as demonstrated below, and did discuss from a macro-economic perspective some of the obvious “corrections” that must take place to restore a sense of stability.  We agree with their contention that a return to some semblance of stability in housing will take years (again holding to their macro-economic view).  As you probably have, there have been some spirited criticisms of the report on various economic blogs around the web as stating the obvious, though their discussion is quite thorough and again the graphics and charts are instructive. 

Our counter to the media’s doom and gloom – research your markets of interest with great care; there are areas with great potential out there. 

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