Housing Price Index: Market Bottom Is a Long Way Off

Last Updated Jun 3, 2009 3:45 PM EDT

Dear Ali;
As part of America's admittedly dwindling army of one-million-plus real estate agents, I await each monthly release of Case-Shiller Housing Price data with dread. Please say something positive about this month's numbers. Please.
A: I have never been a huge Case-Shiller person. For one, I always thought for an academic to use his name to sell data was playing both sides of the fence in the very worst way. I know they don't pay professors much, but it's not like Simon Schama has resorted to coming up with an "Old Masters Index" to pay his bills.

For another thing, the Case-Shiller Housing Price Index (which is co-branded with Standard and Poors, so I ought to properly call it the S&P/Case-Shiller Home Price Index) tracks the prices of single-family homes in the major metropolitan areas. Now I live in one of those major metropolitan areas (New York, the one that never sleeps, especially not right now when it's Fleet Week),and I can tell you that if there's one thing we don't have, it's single-family homes. People in my town live in apartments, and even though Case-Shiller recently made a move to pick up condos, the co-operatively-owned majority of homes in my town still aren't covered.

That said, it's tough for a real estate writer to disregard such a major piece of data. So I took a look at the March numbers, released today, and I have one gut reaction.

These numbers s*ck.

In my senior year of high school, Mrs. Gadberry and Mr. Amis, my calculus teacher and my physics teacher, respectively, tried their hardest to tag-team the idea into me that I should be able to analyze the slope of a line because if I properly understood its vectors, I could generate a magnetic field -- or at least fill a swimming pool. Not much actually stuck, but I do remember that a line that changes from a steep decline to a steeper decline is bad news.

And that's what we've got: February to March's change of S&P/Case-Shiller is a 2.17 percent decline, even steeper than January to February's 1.97 percent. I'm using the seasonally adjusted numbers, but of course, one could argue that spring came late this year. As a working real estate agent, I can certainly tell you anecdotally that here at the end of May, we're about where we would have expected to be at the beginning of April.

So let's "X" that out by looking at year-over-year changes. March 2008 to March 2009 was a decline of 18.69 percent. The really bad news is that's even steeper than the change of a year before, March 2007 to March 2008, a 14.31 percent drop. Calculus and physics have a way to describe this, but it's basically Wile E. Coyote falling from the cliff with the anvil coming right after him.

On our Cramerwatch, Jim Cramer says the housing market's going to bottom in 35 days, but with these numbers, it doesn't look like it.

Update for June: Bonds are certainly acting like the housing market bottom has been reached!

  • Alison Rogers

    Since graduating from Harvard summa cum laude, Alison Rogers has been a reporter, an editor, a real-estate agent, a Wall Street desk jockey, a columnist, a failed flipper, and a landlady. A member of the National Association of Realtors, she currently sells and rents luxury co-ops in Manhattan for the Chelsea-based firm DG Neary. (If you've got $27,500 a month, the firm has an apartment for you!) Her book, Diary of a Real Estate Rookie, was called "a valuable guide for rookie buyers" by AOL/Walletpop, "beach-read fun" by the New York Observer, and "witty" by Newsweek.