Ah – one of our favorite days of the month around the office every month – Case-Shiller data day.  It’s time once again for the breathless media to crow about what a disaster the nation’s single family market is – once again making the oft-repeated error of assuming that as the CSI data goes, so goes the single family housing market in every single market around the nation. 

Regular readers will recall the series posted here a few weeks ago detailing some of the nuts and bolts of the Case-Shiller Indices; part of that post series covered the limitations and weaknesses of the Case-Shiller data.  Here’s a link to the first post in that series if you missed it before.

Read the full Case-Shiller press release from S&P here (the downlink is not working this morning at 0828 MDT - check back later…)

So what’s to consider in this month’s release data?  Clearly the slope (the rate of change) in both the Composite-10 and Composite-20 indices has changed – the rate of loss in the index value is lessening.  Some pundits (and real estate professionals) will no doubt suggest this indicates the end of price corrections or that housing is nearing the bottom – we’d disagree with our typical caveat about the CSI data. 

That caveat is exemplified well by the second chart below, also prepared today by the graphing wizards over at Calculated Risk; this one looks at Case-Shiller price declines in selected markets from their respective peak.  The point – some markets have fallen off the face of the cliff, some have barely stumbled.  To state today – as some media outlets are doing as I write this post – that national housing prices have fallen 17.7% is simply incorrect and misleading.  Some markets are much worse, some are much better. 

 

The first take home for the intelligent residential real property investor – you simply have to study carefully your markets of interest to understand what’s happening and the current phase of the real estate market cycle – only then can you make the right call about asset acquisition or disposition.

The second take home for the intelligent residential real property investor – in most markets (the bubble markets most of all) price corrections are a good thing and must happen before “recovery” can take place.  Price corrections mean better values for you. 

This will be a stressful week before the election – don’t let the chicken littles get to you. 

Technorati Tags: