by Calculated Risk on 9/27/2011 01:42:00 PM

An update: Case-Shiller, CoreLogic and others report nominal house prices. However it is also useful to look at house prices in real terms (adjusted for inflation), as a price-to-rent ratio, and also price-to-income (not shown here).

Below are three graphs showing nominal prices (as reported), real prices and a price-to-rent ratio. Real prices are back to 1999/2000 levels, and the price-to-rent ratio is also back to 2000 levels.

Nominal House Prices

Click on graph for larger image in graph gallery.

The first graph shows the quarterly Case-Shiller National Index SA (through Q2 2011), and the monthly Case-Shiller Composite 20 SA (through July) and CoreLogic House Price Indexes (through July) in nominal terms (as reported).

In nominal terms, the Case-Shiller National index is back to Q4 2002 levels, the Case-Shiller Composite 20 Index (SA) is back to June 2003 levels, and the CoreLogic index is back to July 2003.

Real House Prices

The second graph shows the same three indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices.

In real terms, the National index is back to Q3 1999 levels, the Composite 20 index is back to August 2000, and the CoreLogic index back to July 2000.

In real terms, all appreciation in the last decade is gone.

Price-to-Rent

In October 2004, Fed economist John Krainer and researcher Chishen Wei wrote a Fed letter on price to rent ratios: House Prices and Fundamental Value. Kainer and Wei presented a price-to-rent ratio using the OFHEO house price index and the Owners' Equivalent Rent (OER) from the BLS.

Here is a similar graph using the Case-Shiller Composite 20 and CoreLogic House Price Index.

This graph shows the price to rent ratio (January 1998 = 1.0).

On a price-to-rent basis, the Composite 20 index is back to September 2000 levels, and the CoreLogic index is back to July 2000.

Earlier:
• CoreLogic: Existing Home Shadow Inventory Declines to 1.6 million units
• Case Shiller: Home Prices increased Seasonally in July

by Calculated Risk on 9/27/2011 11:15:00 AM

From CoreLogic: CoreLogic® Reports Shadow Inventory Continues to Decline

CoreLogic ... reported today that the current residential shadow inventory as of July 2011 declined slightly to 1.6 million units, representing a supply of 5 months. This is down from 1.9 million units, a supply of 6 months, from a year ago, and follows a decline from April 2011 when shadow inventory stood at 1.7 million units. The moderate decline in shadow inventory is being driven by a pace of new delinquencies that is slower than the disposition pace of distressed assets.

CoreLogic estimates the current stock of properties in the shadow inventory, also known as pending supply, by calculating the number of distressed properties not currently listed on multiple listing services (MLSs) that are seriously delinquent (90 days or more), in foreclosure and real estate owned (REO) by lenders.
...
Of the 1.6 million properties currently in the shadow inventory, 770,000 units are seriously delinquent (2.2-months’ supply) [down from 790,000 units in April], 430,000 are in some stage of foreclosure (1.2-months’ supply) [down from 440,000] and 390,000 are already in REO (1.1-months’ supply) [down from 440,000].
...
Mark Fleming, chief economist for CoreLogic, commented, “The steady improvement in the shadow inventory is a positive development for the housing market. However, continued price declines, high levels of negative equity and a sluggish labor market will keep the shadow supply elevated for an extended period of time.”

Click on graph for larger image in graph gallery.

This graph from CoreLogic shows the breakdown of "shadow inventory" by category. For this report, CoreLogic estimates the number of 90+ day delinquencies, foreclosures and REOs not currently listed for sale. Obviously if a house is listed for sale, it is already included in the "visible supply" and cannot be counted as shadow inventory.

So the key number in this report is that as of July, there were 1.6 million homes seriously delinquent, in the foreclosure process or REO that are not currently listed for sale.

Note: The unlisted REO seems a little high since total REO has dropped sharply over the last couple of quarters.

Earlier:
• Case Shiller: Home Prices increased Seasonally in July

by Calculated Risk on 9/27/2011 09:00:00 AM

S&P/Case-Shiller released the monthly Home Price Indices for July (actually a 3 month average of May, June and July).

This includes prices for 20 individual cities and and two composite indices (for 10 cities and 20 cities).

Note: Case-Shiller reports NSA, I use the SA data. The composite indexes were up about 0.9% in July (from June) Not Seasonally Adjusted (NSA), but flat Seasonally Adjusted (SA).

From S&P: Home Prices Continue to Show Seasonal Strength According to the S&P/Case-Shiller Home Price Indices

Data through June 2011, released today by S&P Indices for its S&P/Case-Shiller Home Price Indices ... showed a fourth consecutive month of increases for the 10- and 20-City Composites, with both up 0.9% in July over June. Seventeen of the 20 MSAs and both Composites posted positive monthly increases; Las Vegas and Phoenix were down over the month and Denver was unchanged.

Click on graph for larger image in graph gallery.

The first graph shows the nominal seasonally adjusted Composite 10 and Composite 20 indices (the Composite 20 was started in January 2000).

The Composite 10 index is off 32% from the peak, and down slightly in July (SA). The Composite 10 is 1.4% above the June 2009 post-bubble bottom (Seasonally adjusted).

The Composite 20 index is off 31.8% from the peak, and up slightly in July (SA). The Composite 20 is slightly above the March 2011 post-bubble bottom seasonally adjusted.

The second graph shows the Year over year change in both indices.

The Composite 10 SA is down 3.8% compared to July 2010.

The Composite 20 SA is down 4.2% compared to July 2010.

The third graph shows the price declines from the peak for each city included in S&P/Case-Shiller indices.

Prices increased (SA) in 8 of the 20 Case-Shiller cities in July seasonally adjusted. Prices in Las Vegas are off 59.2% from the peak, and prices in Dallas only off 9.5% from the peak.

As S&P noted, prices increased in 17 of 20 cities not seasonally adjusted (NSA). However seasonally adjusted, prices only increased in 9 cities.

Most of this prices increase was mostly seasonal. As S&P's David Blitzer said: "This is still a seasonal period of stronger demand for houses, so monthly price increases are expected ... ". The question is what happens later this year. I'll have more later ...

by Calculated Risk on 9/27/2011 08:41:00 AM

From the NY Times: German Leader Reaffirms Backing for Greece

Promising that Athens would live up to its commitments, the Greek prime minister urged Europe to pull together to take the steps needed to head off a potentially disastrous escalation in the sovereign debt crisis.

In a speech to the same group of German business leaders, Chancellor Angela Merkel said Germany would provide all the help it could to stabilize Greece.
...
Mrs. Merkel urged lawmakers to back the bill “in a spirit of friendship, a spirit of partnership, not in a spirit of imposing something.”

“If Europe isn’t doing well, then over the medium term Germany won’t do well,” she said.

And from the Financial Times: Rolling blog: the eurozone crisis

Our Athens reporter, Dimitris Kontogiannis, has set out the main details of the property tax ...
• The new tax will apply, with a few exceptions, to all electricity-powered buildings
• Those who refuse to pay will have their electricity cut off...
• The government estimates the new tax could raise €2bn-€2.5bn a year...

It sounds like the property tax will pass - and that the German parliament will approve the changes to the EFSF on Thursday.

by Calculated Risk on 9/26/2011 10:21:00 PM

To help keep track ...
• There is a vote on Tuesday in Greece concerning the new property tax around 12 PM ET (there will be protests too). I think this also includes some cuts in public sector too.

• Prime Minister George Papandreou will be in Germany on Tuesday for a meeting with Chancellor Angela Merkel.

• The "troika" inspectors (EU-IMF-ECB) will not return until the new legislation is passed.

• The EU Finance Ministers meet on Monday, October 3rd, and there is very little time for the inspectors to complete their work and still allow the Finance Ministers to vote on the release of the next loan installment. Greece needs the disbursement by mid-October to meet their obligations through the end of the year.

• On Thursday, the German Parliament will vote on increasing the European Financial Stability Facility (EFSF) according to the agreement reached on July 21st.

On August Home Sales:
• New Home Sales decline slightly in August
• Last week: Existing Home Sales in August: 5.0 million SAAR, 8.5 months of supply
• Graph Galleries: New Home Sales and Existing Home Sales