Has Housing Peaked?

Just out from Case-Shiller/S&P/CoreLogic et al

NEW YORK, NOVEMBER 27, 2018 – S&P Dow Jones Indices today released the latest results for the S&P CoreLogic Case-Shiller Indices, the leading measure of U.S. home prices. Data released today for September 2018 shows that the rate of home price increases across the U.S. slowed for the second month in a row.

YEAR-OVER-YEAR
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.5% annual gain in September, down from 5.7% in the previous month.

The 10City Composite annual increase came in at 4.8%, down from 5.2% in the previous month. The 20-City Composite posted a 5.1% year-over-year gain, down from 5.5% in the previous month.

Las Vegas, San Francisco and Seattle reported the highest year-over-year gains among the 20 cities. In September, Las Vegas led the way with a 13.5% year-over-year price increase, followed by San Francisco with a 9.9% increase and Seattle with an 8.4% increase. Four of the 20 cities reported greater price increases in the year ending September 2018 versus the year ending August 2018.”

For us, this is the key part:

MONTH-OVER-MONTH
Before seasonal adjustment, the National Index posted a month-over-month gain of 0.1% in September. The 10-City and 20-City Composites did not report any gains for the month. After seasonal adjustment, the National Index recorded a 0.4% month-over-month increase in September. The 10-City Composite and the 20-City Composite both posted 0.3% month-over-month increases. In September, nine of 20 cities reported increases before seasonal adjustment, while 18 of 20 cities reported increases after seasonal adjustment. .”

More revelations in the press release (see the part I bolded for you!):

ANALYSIS
“Home prices plus data on house sales and construction confirm the slowdown in housing,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “The S&P CoreLogic Case-Shiller National Index showed a 5.5% year-over-year gain, weaker for the second month in a row as 16 of 20 cities showed smaller annual price gains. On a monthly basis, nine cities saw prices decline in September compared to August. In Seattle, where prices were rising at doubledigit annual rates a few months ago, prices dropped last month. The few places reporting larger gains including some of the cities which had the biggest gains and largest losses 10 years ago: Las Vegas, Phoenix and Tampa.

Sales of both new and existing single family homes peaked one year ago in November 2017. Sales of existing homes are down 9.3% from that peak. Housing starts are down 8.7% from November of last year. The National Association of Home Builders sentiment index dropped seven points to 60, its lowest level in two years. One factor contributing to the weaker housing market is the recent increase in mortgage rates. Currently the national average for a 30-year fixed rate loan is 4.9%, a full percentage point higher than a year ago.”

Yeah – the disaster is on page 4 of the press release…ahem…

After the report release, Dow futures were down 93.  But, how many times have I told you to watch Nov. 27th?  Maybe they just don’t read and assimilate as quickly are we do…

24 thoughts on “Has Housing Peaked?”

  1. Question for you G – with everyone aggregating to cities for work reasons, it centralizes everything. Population is still moving out of rural into urban. Rural tax base is eroding everywhere in the world.

    How does one revitalize rural?

    • I think over time, taxes, potholes, construction,. food prices and bs politicking will drive people back to the land. Toss in pollution, lines, social pressures of idiocy… I mean, could you get your son off the land after he’s been there a while now?

      • You and your rhetorical questions! LOL

        I am hoping you are right. I so wish we hadn’t eaten our own railway system when you and I were kids. Those little spur lines and such provided lowest cost transport for large or bulk things from rural to urban, allowing large mfg to be in the sticks. But those are gone now.

        I just hope the kids generation gets some way for things to spread out and decentralize so people aren’t breathing each others stale breath in cities.

        1 acre lot with micro-home AND 3 bedroom house between you and me recently sold for – drum roll – $30k. That’s less than a 4WD truck.

        Smart kids ought to leverage those prices with internet to work from rural…

      • As OM2 and I already know: If you make $100,000 a year and live in a $300,000 house, you have a lower living standard than if you make $50,000 a year and live in a $30,000 house. Life’s about time and free cash flow.

        Oh, OK, selfishly, then: Also about 7-minute commutes and such, too, clean air, less government, better schools, family values…come to think of it, why are we letting this cat out of the bag?

        But hey! You can fix stupid, right? Cities are full of ’em.

      • Spent the 1st 24 years of life in the city. Spent the next 22 in the military. Retired to civilian life and work, living in a 3 BR, 2 acre home in a semi-rural area with 200+ acres butting right up against our property. We have a well and septic and propane heat. The propane also powers a whole house generator in emergencies, although admittedly long-term outages require a ‘rationing plan’ for usage. We grow much of our own produce and have deer, turkey, squirrel and rabbit in our back yard. The basement pantry is stocked with dry goods, canned food and freeze dried and/or MRE meals that can last about 2 years for the spouse and I. We have oil lanterns, flashlights/lanterns with lots of batteries, a basement wood stove and a 1st floor fireplace. We installed a 300 gallon cistern (heavy plastic) in the basement for times when we might not want the generator running. Best part – it’s quiet as a morgue at midnight, reducing the days stress in short order (I still drive 30 miles into the city for work).

    • The way to do this is what China did – an effective, cheap and fast transportation system. I have a railroad nearby and it hauls fast freight all the time. NO passenger service, even though there’s a lot of towns with zero connectivity other than private vehicles. No buses either, and they’re too slow for exurban connectivity. It doesn’t have to be a bullet train, just something that’s just fast, cheap, and regular. It seems that only the autocratic regimes can make the trains run on time, or at all. Even NYC has a pitiful transportation network.

      People can drive 20 minutes without real effort. Once driving goes over an hour, it’s work – especially when we get older. The joys of the land are lost to those who wear themselves out getting to and fro.

      If someone can’t go out for the evening, have a couple of drinks, invite a girl home and have her able to get to work the next day on time, they won’t go out at all.

  2. Except George…Urban is where the jobs, health care, social life, entertainment etc are. My father in law retired from an urban environment to a 450 acre farm with two ponds and a beautiful custom home. You would think that would be a lifelong dream home.

    But…He went from a gregarious, happy go lucky, popular, young at heart and very successful business owner to a grumpy, angry, miserly, out of shape old man. My wife and I and the older children we have, as well as the nephews, nieces, in laws and cousins are shocked at the change. He was such a wonderful, funny man and now he is an old crotchety angry guy. We think he is just bored…His wife and him are always fighting.

    Some people need the constant human interaction. I know I do. It keeps me young and alert. I have thought about living rural…but after seeing what happened to my father in law…who has the same personality type as me…I don’t think so…Yet I am drawn to the mountains and rural life…so maybe the answer for some who are like me is to acquire a weekend getaway home…

    • I’d get him to a dietician – sounds more like early signs of an aging disease, not farm related. We live “apart” and love it out here. Of course, we exercise, avoid stress, and eat unprocessed foods – little wheat and lots of fresh – that kind of thing makes a difference.
      Playful attitude is something we hold in high esteem and work at all the time…

      • Weight gain – not loss – is often a sign of malnutrition.
        Oatmeal, a good multivit, 2 coffees at the same time every morning and sticking to a schedule that includes a lot of activity. Look up the various dementias and nutrition – oh…and I don’t miss on my apple cider vinegar pill daily, iether. Wards off things (so far) of things like gall bladder issues…

        Jump in head first with “Malnutrition in Alzheimer’s Disease, Dementia with Lewy Bodies, and Frontotemporal Lobar Degeneration: Comparison Using Serum Albumin, Total Protein, and Hemoglobin Level” which would have een studied long ago, but for there’s no money to speak of in eating well.

        On gallbladder pain, try https://www.healthline.com/health/gallbladder-pain-relief fer starters…
        at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4919003/

    • I would agree on the Human interaction being a vital part of ones happiness. Though, one can get that in a rural setting also – though depending upon where you move the locals may not wish to interact. On my old ranch, the locals did not let an individual play cribbage with them for 30-40 years even though he married into a family. The local sheriff was called about a fight asked who was in it, who was winning and when the outsider was in the fight and losing he stated that he would finish his TV show about 10 minutes and then be down – it showed the degrees of separation between multi generational families and newcomers to the area.

      Rural is great, can form strong bonds for families but does have potential downsides. I would say your father did it backwards and rural living is better earlier in life because of health care.

      Though how to get a new migration back to the rural environment – change the tax code so that gentrified city folks do not buy up all the land for the tax haven it can be, tax machines at the sames rates or more than humans and give rewards for employing people and local food as it is more sustainable.

    • As you get older, exercise & social interaction is a must to keep you out of the “angry old man” trap. I go to the gym 3 times a week for the exercise & social interaction. Mornings is senior time at the gym, & we go out to lunch a couple times a month. I prefer an Urban area out in the suburbs where it is not so crowded but still near everything. If I need some woods time, I rent a cabin for the weekend & fish & take hikes with the grandkids. I never fished before I retired, but enjoy it now. If he has 2 ponds, stock them with fish, and go fishing. What I do miss, in NY, there were always people out on the streets. In NC, nobody is out on the streets, they just stay inside. I go out for a walk & don’t see anyone.

    • Yes Mark.. the city is where historically people run to during a depression.. historically it has been the place for jobs.. the difference between then and now.. is we have outsourced out industrialization.. we are now a consumption nation rather than one of production..
      our cities are a shell of what they use to be.. one look at the great detroit.. and the steel mills will give you a good idea.. many neighborhoods are tribalized.. run and controlled by gang members.
      a friend of mine drove truck.. he went to the big apple but made a mistake and went to late in the day.. while he was in the place getting his truck unloaded someone stole his radio.. he called the police the reaction was what in the heck are you doing there this time of day.. we won’t even go into those neighborhoods till daylight.. my New York city tale is a room mate of mine was from the bronx.. we were going to go watch a play on broadway.. what a life long outing.. we had to wear dress whites.. anyway getting on the train no one prepared me as to how many people get on it at one time.. we got separated.. I ended up in a very nasty neighborhood in the middle of the night.. went to a church where they fed homeless people they fed me and told me I had sixteen blocks to walk.. alone in dress whites.. I had remembered what a guy I worked with from the city had told me.. never run you run and your dead.. so I walked at a good average pace.. a gang was behind me about two blocks.. banging pipes on the walls etc.. and I know the only reason they didn’t rush me was because they couldn’t figure out what kind of idiot would be in the worst neighborhood in the middle of the night wearing dress whites.. as I walked they slowly got closer. and closer.. about the time I was to turn the corner they were maybe a hundred feet behind me.. I was scared to death I knew my time on earth was just a mere feet away. When I turned the corner there stood hundreds of sailors all in dress white.. the gang melted into the dust.. I swore that time I would never ever go back to New York again in my life.. and I haven’t.. I don’t care what is going on there.. Now.. in respect lets take SF… it has jobs but someone has to pay a couple of million for a dump.. a slum hut.. many living in cars and cardboard boxes because of run away living costs.. food stamps are given to people at what almost a quarter million.. this trend is only going to get worse..
      In Germany the same thing happened during the weimer depression.. legislation was passed and Adolph got into power the people welcomed a leader that could save them from the horrific living conditions that they had.It is also how the Bolsheviki army took over the soviet union brought in many leaders that were power driven. .
      we are in my opinion in that position now.. we need to bring down the cost of living and bring back jobs.. tariff incoming goods and services is a necessity of life we are writing checks on goods without having an income to support that expense..
      Now.. the Jewish communities were the wealthy communities.. I took care of a woman that escaped the polish ghetto.. with her husband and three kids.. I still hear from the one daughter.. a professor out east.. but the stories of how they had to leave their wealth the mansion hide.. many times she would wake up with nightmares.. a horrific time in their lives luckily they all escaped and made it to the USA..
      all of this happened with the blessings of the majority of the average laborers.. they didn’t know what the consequences would be but were powerless to stop it once it started..
      The city as appealing and active as it is is nothing more than a trap in my opinion in a SHTF scenario..the sad part is our legislators have already degraded the constitution enough that all of that is possible..
      I think the industrialists of the past realized the keys figures as to the why.. and they decided to take a smaller profit and keep the economy and the neighborhoods strong..
      you take the crime lords of chicago during the thirties.. my father told a different story. he would tell how a truck would come by the neighborhoods and mob members would drop boxes of food off at the door for families and school children would get a cup of milk and a snack .. food would be distributed to the soup lines.. all of this gave him the strength of the people..
      I use to go into an italian neighborhood.. it was the calmest neighborhood around you could go out enjoy an evening dining and going to the club or a show.. and never have any worries.. one day a petty officer told me.. see that old woman walking down the street.. she is probably going to drop off mob money.. no one will go near her. this is a controlled neighborhood.. nothing happens without the ok of the ones controlling it..

      “Germans were outraged and humiliated by the harsh terms of the Treaty of Versailles, which the Allies compelled the new German government, the Weimar Republic, to accept along with an obligation to pay $33 billion in war reparations. Germany also had to give up its prized overseas colonies and surrender valued parcels of home territory to France and Poland. The German army was radically downsized and the nation forbidden to have submarines or an air force. “We shall squeeze the German lemon until the pips squeak!” explained one British official.

      Paying the crushing reparations destabilized the economy, producing ruinous, runaway inflation. By September 1923, four billion German marks had the equal value of one American dollar. Consumers needed a wheelbarrow to carry enough paper money to buy a loaf of bread.”
      https://www.nationalww2museum.org/war/articles/how-did-hitler-happen

      http://encyclopedia.uia.org/en/problem/136952

      https://www.youtube.com/watch?v=8nGYkEBDjX8

      https://www.youtube.com/watch?v=HGpEkS8XNxE

      https://www.youtube.com/watch?v=5pUhViiNtxg

      https://www.youtube.com/watch?v=I28_9eAwEW4

      in my opinion.. stay away from the cities… you may think that your wealth will keep you safe.. unfortunately it makes you the target..the ones that will stay safe are the ones that like Schindler showed a different side to his position

  3. OM2, I think you are “on the right track” out there in rural countryside. Latest demographics show the younger generations are starting to figure out what our parents already did. You can get more house and land cheaper in the “burbs”, they are starting to relocate out of cities in general ..38% vs 37% city living were latest stats I have seen.
    When we moved to rural suburbs of Philly 20+yrs ago, it was the boondocks.We still share the road with amish buggies out here on the “perimeter” of suburban Phila..
    Now a days since the school district opened a STEM school 5-6 years ago, and it is ranked 1-2 in state now..STEM acts as friggin magnet to area.
    Then again as Mr Mojo Risan said in Texas Radio and The Big Beat…”out here on the perimeter we is stoned, immaculate”.

    • My young EMT working on paramedic son – had a zillion resumes out to local gov’ts all over the country and figures a GS-7-8 in the rurals is so far above a GS-10 in a big city so as to be reedickulous!

  4. I’ve lived most of my life in ‘big metropolitan centers’ right in the middle of it, and I continue to enjoy it as long as we have electricity, because I went through it twice in my life doing without for about several hours.

    There seems nothing wrong with rural living, either. It may depend entirely on each individual’s personality that determines where one is the most happy, IMHO!

    At age around 90 it maybe better to live in a metro area where one can walk home from a medical procedure.

    • That’s our thinking too. I promised E that when she turns 80 (or 85) we will look at city liv8ing near a grocery, dentist, and hospital.
      Don’t ask about walking distance to the funeral home, though, lol…

    • ROLF!

      As a young boy I remembering my grand parents refusing to move because they were less than a mile from grocery (and other) stores, and could easily walk it needed.

      A few years later they had trouble walking to the mail box located at the end of a 20 ft driveway.

      Don’t make future plans based solely on todays abilities.

  5. Jeesh George. All these people talking about how well the Chinese are doing. The HSI has droppdf from 33k and some change to 26k and some change in the last 6 months..

    Now imagin the Dow dropping almost 10k in 6 months? Be a different take on things.

  6. Dear Mr. Ure,

    One of my banks made a change to a mutual fund earlier this year that I found of…interest. I had deposited a modest amount in the account in 1992 and left it to sit. Fund statements reliably advised rates of return of both annual and from account inception. The latter to last year was 6%. This year the fund name was changed, rate of return advice from account inception was dropped, and gain for the current year has been dismal.

    St. Nicholas will receive a frugal request for merino wool gear to safeguard core valuables going forward.

  7. city life for the average laborer….
    in the eighties.. I worked up to six jobs.. although the wife tells me I was working eight..it doesn’t matter what you know.. a piece of paper is important.. but you can be the jack nabbie of all the workers and be in a position of desperation. I have done jobs that the vast majority wouldn’t even consider..

    https://www.youtube.com/watch?v=-SCB1t28nDU

    a reason for free college

    https://www.youtube.com/watch?v=PqzEcER8AJA

    https://www.youtube.com/watch?v=6dLo8ES4Bac

    https://www.youtube.com/watch?v=MWMzgU_QfHU
    we discovered the hard way a while back that if your between fifty and sixty five years of age you are unemployable…and if your car is ten years old or newer or you own a home you are not eligible for any assistance and unemployment is a joke..

    https://www.youtube.com/watch?v=CwpdGyIY2fQ

    for this video.. a brother inlaw came by for thanksgiving.. he is living in his car.luckily a department store is letting him park there and use their bathroom… he went to retire from the military and somehow his records vanished when they were digitizing them.. the best he can do is find a part time position he is in that don’t hire age bracket.. he is still trying to get his records fixed but they are having difficulties seems they think they got shredded thinking they were done..

    https://www.youtube.com/watch?v=ZWNfPH490cY

    https://www.youtube.com/watch?v=hOmCQqNiYsY

    https://www.youtube.com/watch?v=yXf-xcR8bdA

    there was a show thirty days on the green network.. the goal was to take someone and put them in the position of the average laborer without their network or any of the benefits they have.. it only lasted one season.. no one could do it.. well I take that back one couple did it and was amazed at just how hard it was..

    https://www.khanacademy.org/humanities/world-history/ancient-medieval/classical-states-and-empires/a/rise-and-fall-of-empires

    • A reason for NOT free college:

      The 5 million people employed by accredited colleges and universities in the United States, their families, and all the millions of peons working at Applebee’s, Hobby Lobby, Rue21, Zaxby’s, and 10,000 other retail establishment brands in-between, for whose salaries these 5mln people are partially, or wholly responsible.

      Convince those 5mln cooks, janitors, groundskeepers, GAs, Professors, and Lecturers to work for free, and convince the 30mln low-level sales and food-service workers whose employ they maintain, that food and a roof are optional, and then I’ll listen…

      • Ray an education is the window and door to the future in a way I agree with you.. why in the world should I pay for someone else’s brat to go to grade school or fund a highway crew to fix roads I will never drive on.. or a fire department etc. etc… the people utilizing the schools for their children and using those roads etc should be the ones paying the wages and expenses of upkeep and developement etc.. not me or anyone no using those services.. I could save a few thousand a year if we could get that going.. now just like other countries handle the further education similar to public schools and push education.. at this time we have dumbed down our population put everything in the value of a sheet of paper. I have met college grads that can’t read the daily news and we are putting our future in their hands.just think about it.. the golden oldies are going to be RAP and safety pins through lips with easy access pants hung to their knees leaving them dumb enough to be enslaved allowing those in power to decide who gets to stroke their monkey..( oh heck we are already there.. we keep voting in the same crap election after election that come right out and refuse to read what they are voting on.. LOL )… the path to the future lies in the path of our population being educated.. while the rest of the world flashes forward we are saddly stalled behind.who are the doctors who are the teachers.. I have met people coming here from other countries all because they got a free education a free home utilities while john jones kids are not allowed to attend school.. instead they are trying to survive in a high tech world with a first graders education..
        I am one of the people working behind a checkstand.. hauling trash ,washing dishes, scooping manure.. the ugly one washing blood tanks so some woman can have makeup.. ( nasty job nasty..) skinning roadkill scooping hot dirt.. etc.etc etc.. you don’t get ahead by not having a piece of paper the world thrives on paper.. it isn’t what you have studied or what you know but what the sheet of paper you hang on the wall is and where it is from..facilities are judged the same way.. even though the facilities pay for that sheet of paper…. that paper is the signal for a higher wage structure..
        I tell my kids go to oxford or cambridge etc.. the cost of an education is cheaper from there than from any tech school here.Luckily all of my kids have gotten full scholarships..( my eight year old that everyone was telling me that she was a slow learner..(till she took that dumb puzzle I had here and flipped through it like a hot knife through butter.. I actually put my hearing aides in LOL.. she got a super high award one in three ) I still have to lecture them on not dumbing themselves down to fit in..and to sit and study..even if they don’t think they need to really what will it take an hour or two to read the stupid book a few hours to reflect on what it says… but never ever stop reading and learning..MIT Harvard Yale BYU etc.. all offer free education over the airwaves the bad thing is you don’t get the coveted piece of paper that marks the tenacity to sit and suffer through the classes and if there isn’t a prize in the cracker jack box well who wants to sit and eat the cracker jacks and not get the prize..instead we give that prize away daily to people that don’t live here.. don’t have the USA as their No. 1 love.. No for me.. an education is the only way for the USA to compete with the rest of the world.. if you want to gain control over a population keep them uninformed and dumb them down..

        https://www.edweek.org/ew/articles/2012/11/07/11greenstone_ep.h32.html

        https://edlab.tc.columbia.edu/blog/9886-Why-is-Education-So-Important-in-Our-Life

        http://pure.iiasa.ac.at/id/eprint/4889/

        https://www.researchgate.net/publication/278848636_The_importance_of_educational_technology_in_teaching

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