The Case-Shiller Home Price Index for April came out today showing the annual price decline has improved in both their monthly and annual returns. Considering this is their April report, early in the buying season, I am imagining a much better report for May and June when those come out over the next two months. The problem is, by the time they come out and confirm what I (and Jim Cramer from thestreet.com, see below) have been saying for a while. The housing market is stabilizing and the worst is behind us. (I will be discussing this and more tonight in my FREE Live New Foreclosure Investor Webinar at 6pm PDT (9pm EST). You must register in advance, so make sure you call 800-310-7730 x2 or go HERE now.)
More from Case-Shiller…
The S&P/Case Shiller 20-city home price index fell 18.1% in April from a year ago versus forecasts for a drop of 18.6%.
But on a month-over-month basis, the index showed some improvement. Prices fell 0.6% versus March, after posting a 2.2% drop in the previous month.
"The pace of decline in residential real estate slowed in April," says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. "In addition to the 10-City and 20-City Composites, 13 of the 20 metro areas also saw improvement in their annual return compared to that of March. Furthermore, every metro area, except for Charlotte, recorded an improvement in monthly returns over March. While one month's data cannot determine if a turnaround has begun; it seems that some stabilization may be appearing in some of the regions. We are entering the seasonally strong period in the housing market, so it will take some time to determine if a recovery is really here.
"The stock market bottomed in March and measures of consumer confidence have turned upward. This report shows that these better spirits are also appearing in the housing market," Mr. Blitzer commented.
In terms of annual declines, the three worst performing MSAs continue to be the same three from the Sunbelt. Phoenix was down 35.3% in April, Las Vegas declined 32.2% and San Francisco fell 28.0%. Denver, Dallas and Boston continue to fare the best in terms of annual declines down 4.9%, 5.0% and 7.7%, respectively. Charlotte, Chicago, Cleveland, New York, Portland and Seattle posted record annual declines in April. For the month Dallas was the best performer returning +1.7%, while Las Vegas was the worst performer down 3.5%.
The S&P/Case-Shiller Home Price Indices are revised for the 24 prior months, based on the receipt of additional source data. More than 21 years of history for these data series is available, and can be accessed in full by going to www.homeprice.standardandpoors.com.
This just in from Jim Cramer… Stay Ahead of the Lagging Housing Index
Terrific! The Case-Shiller index says home prices bottomed in June! That's right, June figures showed that all 20 metropolitan areas increased since the previous month, ending the long slide, and the keepers of the index declared that a bottom in housing had occurred June 30.
There's a problem, though, a problem I knew that would cause an issue when I made my prediction that prices would bottom June 30. The index doesn't give you a June reading until the end of August. At that point it will be so painfully obvious it won't matter.
Yep, it will take two months for this silly index to register June readings, and if you're an investor, by then it will be too late. It will be obvious that foreclosed property held by banks will be worth more than it was when the institutions repossessed them, and that the Other Real Estate Owned category will begin to go down in value from sales or actually be viewed as a positive because there will be so little inventory left, a combination of low price, low rates — remember that 5.5% rate that freaked people out? we've round-tripped that back — and little new home construction.
The hazards of waiting for an all-clear have never been more deadly for those debating buying Bank of America or U.S. Bancorp or Wells Fargo, which are so levered to Case-Shiller. I own BAC and WFC, and I have to tell you that by the time you get the all-clear, I expect to be cutting these positions in half to take the gains I expect when everyone recognizes the housing bottom.
As usual, I do not expect this to be good news for the homebuilders. The homes being sold are foreclosed homes that must be sold, and they are driving down the cost of a new home to the point where it is not economical for many builders to build, something that should have happened a year ago. I see people buying Lennar and KB Home and that's fine, but don't do it on my account.
Oh, and despite the endless attempts by editors to somehow imply that a foreclosed home sale isn't any good vis-a-vis a non-foreclosure sale, I come back and say, so what? A home sale is a home sale. Anything that removes inventory gives you equilibrium, and equilibrium means an end to house price depreciation, which was the root cause of the recession and was the genesis of the short-lived garden-variety depression bracketed by the fall of Lehman and the announcement by a few key banks in early March that they were profitable.
Thoughts from Alexis: Second half of 2009 is going to be a great time to invest in real estate, with house depreciation behind us. Since there is no reason to pay retail, when you can buy wholesale foreclosures, you will need to get your ducks in a row right now, and get to work learning how to find, structure and close great foreclosure deals now, while we still have them. Yes, there are alot of foreclosures in the system right now, and more on their way, but with housing stabilizing, we won't have this window of opportunity for long.
I will be discussing this and more tonight in my FREE Live New Foreclosure Investor Webinar at 6pm PDT (9pm EST). You must register in advance, so make sure you call 800-310-7730 x2 or go HERE now. Talk to you tonight!
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