Posts Tagged ‘house price’
A Huge New Call On Housing That You Must Pay Attention To
Pundits and bloggers are making predictions all the time, and usually they should just be ignored.
Today though, the popular economics blog Calculated Risk published a post called The Housing Bottom Is Here. You should definitely pay attention.
Now first, let’s go over the argument.
To start, the post makes the obvious—yet all too frequently neglected—pointed that when it comes to housing there are two “bottoms.” The one that relates to economic activity and jobs is housing construction/new home sales. The other bottom refers to pricing.
In terms of new construction/total home sales, by all accounts we seem to have turned the corner.
New houses have achieved liftoff lately.
And as for total home sales, they’ve now absolutely flatlined.
As for prices—which is arguably the more difficult case to make—Calculated Risk writes:
The problem with using the house price indexes to look for a bottom is that they are reported with a significant lag. As an example, the recently released Case-Shiller index was for November and the index is an average of September, October and November – so it is a report for several months ago. The CoreLogic index is a little more current – the recent release was for December, and CoreLogic uses a weighted average for prices (December weighted the most) – but that is still quite a lag.
Both of those indexes will bottom seasonally around March, and then start increasing again.
There are several reasons I think that house prices are close to a bottom. First prices are close to normal looking at the price-to-rent ratio and real prices (especially if prices fall another 4% to 5% NSA between the November Case-Shiller report and the March report). Second the large decline in listed inventory means less downward pressure on house prices, and third, I think that several policy initiatives will lessen the pressure from distressed sales (the probable mortgage settlement, the HARP refinance program, and more).
Now you may have disagreements here, but you should absolutely pay attention when Calculated Risk makes a call like this.
The Calculated Risk archives go back to January 2005, so we’re talking at least 7 years of day in/day out coverage of the economy, and the site has always had a special focus on housing.
From 2006-2008, the blog was famously co-authored by “Tanta” (she passed away in December of 2008), who really put the blog on the map with her incredible knowledge of the housing and mortgage markets—knowledge that allowed her to anticipate the bust from miles away.
Throughout this, the main author—the totally un-egotistical Bill McBride (his name is not featured prominently—has plugged away, meticulously chronicling just about every economic indicator there is, from housing starts, the the Architectural Billing Index, the restaurant index, the regional Fed surveys, the ISM, and so on. And by diligently following these measures, he’s gotten to know them REALLY WELL.
Now, speaking from personal experience here, we can say that one of the best advantages you can get in the business of writing about economic conditions is familiarity with the data. So if you’ve covered lots and lots of jobs reports, you’re going to have a much easier time knowing what data is key to suss out, and when you’re seeing a turn.
Since Calculated Risk puts everyone to shame on this front, the blog regularly identifies key twists and turns.
For example, after years of super-bearishness on housing-related activity, it was early last year that McBride started talking about residential construction actually being a net positive contributor to GDP—the first time since 2005.
Also, because Calculated Risk keeps the best data of any blog, it’s always the first with now-classic charts like this one, every time a new jobs report comes out.
The bottom line is: Calculated Risk is exactly what you want in economics reporting. Totally non-ideological, non-book talking, data-driven, incredibly experienced, and just knowledgeable as all get-out.
When a site that got started by famously chronicling the housing bust says that housing is at a bottom, you listen.
Now read CR’s full post here.
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See Also:
- Only One Housing Market In America Saw Prices Gain In November…
- RITHOLTZ: A Housing Bottom? You’ve Got To Be Kidding
- UPDATED, CORRECTED: The DC Market Is Still Kicking Your Housing Market’s Butt
Property market remained stagnant in 2011
House sales fell 1 per cent in 2011, with just 869,000 residential properties sold, according to HM Revenue and Customs (HMRC).
In January 2011, traditionally the weakest month for property transactions, just 45,000 houses were sold.
However, the market did improve at the end of the year, with 76,000 sold in December.
The property market has been in a slump for the last three years, with high inflation, high unemployment and stringent lending criteria making it impossible for many people to afford to buy their first home or move house.
Many first-time buyers are unable to raise the high deposits demanded by mortgage lenders, leaving them trapped in expensive rental properties.
Property sales in 2011 were around 50 per cent lower than they were in 2007, prior to the onset of the credit crunch and were nearing the record low level of 2009, when just 848,000 homes were sold.
The Council of Mortgage Lenders expects total lending to fall again in 2012, suggesting a further fall in house sales is likely.
Official figures released last week by the Department for Communities and Local Government (DCLG) revealed house prices fell by 0.3% in the year to November 2011.
The average UK house price ended the year at £205,796.
However, house prices increased by 0.7 per cent for first-time buyers and the price of new properties increased by 7.7% on average, compared with 2010.
The DCLG’s figures also indicated that the North/South divide in house prices is widening, with the North West experiencing the largest fall in property prices while the smallest was in the South East.
High inflation and rising unemployment are expected to lead to a substantial increase in home repossessions this year.
The Council of Mortgage Lenders expects a 22 per cent rise in repossessions in 2012 to 45,000.
House prices down 1.3% in 2011
Mortgage lender the Halifax claims that house prices fell by 1.3 per cent last year to an average of £160,063, their lowest level since July 2009.
According to the Halifax House Price Index, house prices fell 0.9 per cent in December, compared with the previous month.
Although prices rose in the third quarter of 2010, they fell by 0.1 per cent in the fourth quarter, offsetting the earlier quarter’s increase.
The bank expects prices to be stable throughout 2012 unless the economy falls into another recession.
The report contradicts earlier figures from Nationwide, which suggested that house prices rose by 1 per cent in 2011.
Property prices have plummeted since the onset of the credit crunch, with banks and building societies exercising extreme caution over lending, making mortgages very difficult to obtain, especially for first-time buyers.
Recent research by property valuation website Zoopla suggests that some regions have fared significantly better than others when it comes to property prices.
Zoopla recorded an overall fall in UK house prices last year, but an increase of nearly 7 per cent in Scotland, where the average house now costs £164,844.
Zoopla’s research suggests the average house price in Britain is now £221,331, significantly higher than the Halifax’s figure of £160,063.
According to Zoopla the average price in England fell 0.75 per cent in 2011, to £228,926, whilst the average price in Wales fell 0.1 per cent to £153,826, compared with 2010.
Zoopla also reported a widening of the north/south divide in England, with house prices rising in London and the south-east, but falling in the north.
It suggests the average house price in London, where demand for property is high, increased 2.3 per cent last year to £416,890, while prices fell 5.8 per cent in north-east England to £156,659.
Take A Tour Of The 20 Most Luxurious Streets In The UK
An Englishman’s home is his castle, goes the cliche.
Nowadays, of course, that’s a very expensive castle.
Lloyds TSB just released their list of the most expensive residential streets in the UK. In some of these streets, the average home price is well over $6 million dollars, well over 20 times the average home price of £163,822 ($254,497).
#20 Carlton Hill
Area: Westminster
Region: Greater London
Average House Price: £2,577,000 ($4,004,000)
SOURCE: Lloyds TSB
#19 Rawlings Street
Area: Kensington and Chelsea
Region: Greater London
Average House Price: £2,601,000 ($4,041,000)
SOURCE: Lloyds TSB
#18 Moles Hill
Area: Leatherhead
Region: South East England
Average House Price: £2,608,000 ($4,052,000)
SOURCE: Lloyds TSB
See the rest of the story at Business Insider
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See Also:
- The 19 Greatest Gaffes From The UK’s Prince Philip
- Check Out 10 Of Europe’s Oddest Micronations
- The UK Is No Longer The Sixth Biggest Economy In The World
AFTER CHRISTMAS: Here’s What’s Coming In The Week Ahead
Earlier:
• Summary for Week ending Dec 23rd
Happy Holidays! This will be a light week for U.S. economic data. The Case-Shiller house price index will be released on Tuesday. Also the December Chicago PMI and three more regional Fed manufacturing surveys will released this week.
All US markets will be closed in observance of the Christmas Day holiday.
9:00 AM: S&P/Case-Shiller House Price Index for October. Although this is the October report, it is really a 3 month average of August, September and October.
This graph shows the nominal seasonally adjusted Composite 10 and Composite 20 indexes (the Composite 20 was started in January 2000).
The consensus is for a 0.2% decrease in prices in October. The CoreLogic index showed a 1.3% decrease in October (NSA). I expect new post-bubble lows for the Case-Shiller indexes (seasonally adjusted).
10:00 AM: Conference Board’s consumer confidence index for December. The consensus is for an increase to 58.1 from 56.0 last month.
10:00 AM: Richmond Fed Survey of Manufacturing Activity for December. The consensus is for the index to be at 5, up from 0 in November (above zero is expansion).
10:30 AM: Dallas Fed Manufacturing Survey for December. The index showed contraction in November with a reading of -5.1 (the only regional survey showing contraction).
7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. This index has been especially weak all year, although this doesn’t include cash buyers.
8:30 AM: The initial weekly unemployment claims report will be released. Last week was the lowest level for the 4-week average of weekly claims since early 2008.
9:45 AM: Chicago Purchasing Managers Index for December. The consensus is for a decrease to 60.1 from 62.6 in November.
10:00 AM: Pending Home Sales Index for November. The consensus is for a 1.5% increase in the index.
11:00 AM: Kansas City Fed regional Manufacturing Survey for December. The consensus is for the index to be at 6, up from 4 in November (above zero is expansion).
No releases scheduled.
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- Why Oil Prices Are Killing the Economy
- RAIL: This Crucial Economic Indicator Just Refuses To Go Negative
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