Housing–Pretty Much What We Expected

Hot off the press (release):

New York, December 30, 2014 – S&P Dow Jones Indices today released the latest results for the S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices. Data released today for October 2014, shows that the pace of home prices across the country continues to decelerate although eight cities did see prices rise faster.
More than 27 years of history for these data series is available, and can be accessed in full by going to www.homeprice.spdji.com. Additional content on the housing market can also be found on S&P Dow Jones Indices’ housing blog: www.housingviews.com.
Year-over-Year
Both the 10-City and 20-City Composites saw year-over-year declines in October compared to September. The 10-City Composite gained 4.4% year-over-year, down from 4.7% in September. The 20-City Composite gained 4.5% year-over-year, compared to 4.8% in September. The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 4.6% annual gain in October 2014 versus 4.8% in September.
Miami and San Francisco saw prices rise 9.5% and 9.1% over the last 12 months. Eight cities, including San Francisco, Denver, and Tampa saw prices rise faster in the year to October than a month earlier. Las Vegas led the declining annual returns with a decrease of -1.2%.

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Chart 2 below shows the index levels for the U.S. National, 10-City and 20-City Composite Indices. As of October 2014, average home prices for the MSAs within the 10-City and 20-City Composites are back to their autumn 2004 levels. Measured from their June/July 2006 peaks, the peak-to-current decline for both Composites is approximately 16-17%. The recovery from the March 2012 lows is 28.5% and 29.3% for the 10-City and 20-City Composites.

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Our usual footnotes apply here:

Main one is that the prices are all on the sales price side.  In reality, if you bought a home in 2006 and think you can get the same for it today, stand by to be depressed:  In reality on the selling side you would eat up to 7% (or more) for inspections, commissions, points, yada, yada.  And then, on top of that there’s the matter of monetary inflation which no one likes to talk about.

But if you were buying loaves of bread, or a new Lexus, look at the purchasing power of $1,000 in 2006 compared to 2014 and you’ll find that $1,171.92 would be needed, or that “same sized house” back in 2006 would have a “today” sales price 15% less than current prices (85.33% of today’s prices to be presact.)

Our best advice?  Buy a modest home, pay it off.  Learn to do your own home remodeling with a Skil saw, plumbing, and electrical goods.  In other words, sweat equity and innovations…

Comments

Housing–Pretty Much What We Expected — 10 Comments

  1. I’m working on building a log cabin. It will be slow. I looked at all the kits and different ways to build one and finally came to the conclusion that these guys have the answer. I have no financial interest in them.

    http://www.buildloghomes.org/

    They teach a two day course in Las vegas. A long two days. They’ve been doing it for years. Their way of building is fast and strong. The guy who started it built the cabins in the TV show Northern Exposure if you’ve seen it. The course is complete and covers most everything and they have forum help and tool rental for their graduates. I’m an electrician and have been around building a lot and still felt it was worth the money. Around $795.00. It’s around 24 hours of instruction so $33 and hour or better.

    I have a friend who’s friend built a log cabin. His logs are only about 6″ to 8″ on this cabin. I live in the Southeast and when we went there it was blazing hot. Going inside it was cool. With no a/c. There was a conventional 2×4 kitchen built on the side. You could step in that room and immediately start sweating. It’s amazing how the logs temper the heat. I believe with bigger logs you could get a better effect.

  2. In my limited experience I’d say townhouses are the most cost effective without going to into exotic methods of sheltering. I purchased mine in 2002 and pay much less than a comp apartment. Downside is you hope you get good neighbors, which I have luckily here in Lacey, Washington. The log cabin kits have intrigued me since I was a teen, and one day it is my dream, like in retirement to put something like that together on a lake front property.

  3. “Our best advice? Buy a modest home, pay it off. Learn to do your own home remodeling with a Skil saw, plumbing, and electrical goods. In other words, sweat equity and innovations…”

    What about a container home? You can buy a used shipping container for $2500, do it yourself for under $12,000 including a septic system. Install a solar pannels for an additional $8,000 and whalah, all you gotta do is pay taxes.

    Purchase some acres at a pretty decent price depending on where ya live and it would be paid off in no time cept the government rent check every month for stuff like ebola research and congressional over site lunch field trips with lobbyiests and hookers. But in essence, you would own your own home and never have a PUD bill.

    Didn’t you write a book on “how to live for under $10,000” a year George? How about how to build and own your own home for less then $20,000 a year?

    Plus anytime you want an addition you just add another container.

    What do you think about manufacturered log homes George. You can get a good deal on those as well. Nice 3 bedroom shell (doesn’t include plumbing and electrical, cabinets and apliances.) For under $60K.

    • Actually, we did a whole deal on container homes in our old site (and also be sure and see the electronic wall, minimalist home design over on the Peoplenomics site – complete homes in the 500-700 SF range…but yes, covered containers but they do have issues, not the least of which is zoning and such…

    • Last time i saw the digital wall, it was a digital image of a digital image of an artistic picture image of building bridges to nowhere with an old light presented, that is yet to be turned on.

      Someone recently asked me, “why are you so important that the powers that be pay attention to you?” I was thinking about that question couple days ago at the exact moment when a small car slammed into the ass end of my dump truck doing 80mph. Didn’t even hit their breaks.

      I had stalled out on a hill. No violations, had my 4 ways on. All three people in the car were in their 20’s and were stoned on drugs not paying attention. Girl in the back seat didn’t have her seat belt on and I saw her face hit the winshield, in my mirror. All of them walked away (quite sober) after the impact. No major trama. It was truly a miracle they survived. They should have been dead. Instead, they recieved The gift of Life. I was just part of the miracle.

      I never answered the person who asked me that question.

      Can ya link the place for the reader that had the question about shipping container homes but didnt openly ask? A practical solution for every day living. A book, would be a fine idea, the mind is not all there is. The mind can die and so can the body. But A thought can remain to live million lives, in A Book.

      Thanks G.

  4. 84 – My A_s, that guy is a cheater par deluxe, you wanna bet he gets 5 foot gimmees, 2 and 3 tee shots on every hole, and throws the ball out of sand traps. The only thing Obama has played other than a little pick-up-ball is the radio.

    • “often-mentioned but seldom-seen” good eye George, a pun for the comment on Obama’s golf game, and “bites the dust” a pun for the comment of throwing the ball out of the ‘sand traps’ and Obama bring the boys and girls out of Iraq. Etc. Etc.

      And well, I found the comment humorous and the thought delightful for all its many facets. As well as, it aligned with my first comment and leaving 2 A’s. “A_s”

      0-ne word to a deep thinker, can have many facets.

      Hope you have a great new year.