Housing: Beginning of the Roll-Over?

Case-Shiller, S&P, CoreLogic Press Release being with the headline “RISE IN HOME PRICES REMAINS STEADY AT 6.4% ACCORDING TO S&P CORELOGIC CASE-SHILLER INDEX ”  which – since we’ve seen lumber futures fall 7% in the last two sessions, we truncated to a more believable ” HOME PRICES REMAINS STEADY.”

No one likes to consider a peaking process – but we have to keep the Reality Glasses on sometimes…  OK, take ’em off, then, and read:

“NEW YORK, JULY 31, 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 May 2018 shows that home prices continued their rise across the country over the last 12 months.

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 6.4% annual gain in May, remaining the same as in the previous month. The 10-City Composite annual increase came in at 6.1%, down from 6.4% in the previous month. The 20-City Composite posted a 6.5% year-over-year gain, down from 6.7% in the previous month.

Seattle, Las Vegas, and San Francisco continued to report the highest year-over-year gains among the 20 cities. In May, Seattle led the way with a 13.6% year-over-year price increase, followed by Las Vegas with a 12.6% increase and San Francisco with a 10.9% increase. Seven of the 20 cities reported greater price increases in the year ending May 2018 versus the year ending April 2018. “

And the one chart that we track closely?

To us, this looks a lot like the 2008-2008 topping process was the Elliott wave high.

Under normal Elliott rules, since we may be higher, it could be argued this is just a market going on to new highs.

Lumber prices argue no.  And we offer the idea that if we back-out inflation (and go by inflation-adjusted pricing) things would be less rosy, indeed.

Thus today’s definition of “Bravery”  Buying a house at these prices in Seattle!

23 thoughts on “Housing: Beginning of the Roll-Over?”

  1. Try building a house right now I’m getting killed with the prices but I knew that going in I wanted to get it done before the collapse

    • David
      have you looked at any alternate building materials such as steel studs and such?
      Are they any lower than current lumber prices?

      • ????…

        Material costs aren’t that bad.. I prefer wood but with steel your really not saving anything. Each has their strengths.
        I helped build a national display for home shows around the USA..the home was out ok cardboard for shipping purposes and easy setup..and wow..if it would have been waterproof I would have been proud to live in it. Instead I guess I’ll just have to be content in our home.but then seriously who needs gold faucets lol..Oppulance to the max..
        Now I want some new countertops lol..

    • OK, I hear you! In my view, a good move. However, its not the end of the story. After the house is built, you will meet a “wolf” at your door called the “City or County Tax Assessor!” They seem to have this “control knob” in their office labelled “Property Tax Payer!” When they need a raise, or more money, they just turn the “knob” a few clicks and money to fill their coffers magically appears.


      • Yes, the wolf has been growling, snarling, and snapping over the increase in house prices leading to increase in property values, per the appraisal district, causing increased property taxes. Word in Texas is that the RAISE EM HIGH, came down from the top…hit em 10-15%, and that is what just happened. You can fight em, next year, they’ll wash, rinse, and repeat. This pattern is not going to stop EVER; they’ve raised their appraisal values and thus property taxes so when the collapse comes, it’ll take a few years to trickle on down to lowering your appraisal value, thus, they can ensure themselves a lot of increased tax revenue to come. IF you can, downsize to something more reasonable (smaller, less taxable value), but it is not a permanent solution, they hit ALL properties across the board. If you can afford the property taxes now and into the future, stay put.

      • Even if the property appraisal values come down, there are other tricks “wolves” have learned! They climb on board with the pubic that starts “howling” taxes are too high so the “wolves” hire a corporate accounting firm to bring “things” more in line. They come up with a more “fair” method for calculating taxes, and swear the change is “revenue neutral.” Yes, it is neutral, but only for that year. In the whole process rate applied on the tax base increases, as the appraisal value is reduced and all is good! Except the new rate takes a bigger bite out of the appraised value, and the “music goes on” until next time when the “geese” start getting ansy. The art of taxation is like pulling feathers of a live goose. Pull it slowly enough where it doesn’t realize what is going on, it won’t bite you! A good case where the quills were pulled to quickly and the hand got bitten is the Glacier County Tax situation.


        Its TRUE! Two things a person can’t escape in their lifetime are TAXES and DEATH!

  2. When you need materials for a renovation, it’s generally worth paying the current price for what you need, painful though it is. Buying future material to stock can wait until prices stabilize or fall, and they generally do in the off season. The sad thing is that specific properties only become available at the top of the market, and if you need them specifically, you need to negotiate and lock them in as best you can.

  3. Didn’t Trump put a tariff on Canadian Lumber, perhaps there is a something under the radar that suggest those tariffs will come off and American lumber will revert to a lower base because of the Canadian supply. Just guessing, but surely this is more complicated than lumber prices are down. Perhaps when the full damage is assessed with the CA fires, there will be a jump in price for rebuilding?

  4. George, I’ve been going through your PN Master Index to see what I missed, or perhaps is relevant again. FYI, I did discover two incorrect pointers that you might want to look at:

    June 10, 2017
    March 22, 2017

    I’ll mention more if I find them. It’s quite amazing that you’ve managed to write all these useful words!

    Thanks for the great work!

    • It’s being done. Cute, nifty process, but it’s strictly trade-show bait and not cost-effective.

  5. Build a monolithic dome out of shotcrete and rebar. About half the construction cost of a new home in my neck of the woods, and a much stronger structure. Plus you can build it above or below ground. Or both!

    • Great idea, but shotcrete is not a DIY option for many. It’s specialized skill and equipment, though the result can be great. Concrete and steel rule when it comes to longevity.

  6. My husband I were talking at dinner the insurance companies have been surely taking a hit 700 homes lost so far in calif wildfires, 600 plus in Hawaii, are those people going to rebuild? If so with what? Money, materials, floods damage on the east coast and we haven’t even gotten into hurricane season yet

  7. Get Schiller home prices adjusted for inflation the past 100 years. You will notice it was always between 80 to 120 except 2000-2007 when it went to 200. 40% higher than anytime the past 100 years. That is what home prices went down. 40%. Well I have the most recent number. Price are 170. 30% over value. Plus we could go below the 120. Which would make a bigger drops. 2000-2007 easy financing. 2014-2018 long term rate artificially held down by the government.Getting back to normal will be another hit to housing prices.

  8. If you can get by with it in your area put up a an extremely large Quanson Hut and inside put a two story garage or shed where you can live in and then put your tools in another shed and you have enough room to park your farm equipment and your vehicles and some of your animals all sheltered from the weather and they are a lot cheaper than houses trailers brick houses or earthships or anything else

    • Y09u are re-inventing the “barndominium” you know, right? Some grand one’s here in the thinking state.

Comments are closed.