Housing Rocks (but Softer)

Is it interest rates climbing that are driving borderline people to finally buy a home?  Is the 2009 period gone behind us and never to return?  Is the APP BUBBLE going to last forever in Seattle and the Bay Area?

Here’s this morning’s press release from S&P:

NEW YORK, JUNE 26, 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 April 2018 shows that home prices continued their rise across the country over the last 12 months. 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.
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 April, down from 6.5% in the previous month. The 10-City Composite annual increase came in at 6.2%, down from 6.4% in the previous month. The 20-City Composite posted a 6.6% year-over-year gain, down from 6.7% in the previous month.
Seattle, Las Vegas, and San Francisco continue to report the highest year-over-year gains among the 20 cities. In April, Seattle led the way with a 13.1% year-over-year price increase, followed by Las Vegas with a 12.7% increase and San Francisco with a 10.9% increase. Nine of the 20 cities reported greater price increases in the year ending April 2018 versus the year ending March 2018.

Before seasonal adjustment, the National Index posted a month-over-month gain of 1.0% in April. The 10-City and 20-City Composites reported increases of 0.6% and 0.8%, respectively. After seasonal adjustment, the National Index recorded a 0.3% month-over-month increase in April. The 10-City and 20-City Composites posted 0.1% and 0.2% month-over-month increases, respectively. Nineteen of 20 cities reported increases in April before seasonal adjustment, while 17 of 20 cities reported increases after seasonal adjustment.

As you can see, the index is up enough to argue that we will not see an Elliott type decline (since we have gone to new highs).

The problem is Elliott never talked about inflation so we don’t know when, exactly, inflation begins to matter in wave counts.  For now, enjoy the growing home equity and don’t spend it on anything stupid.

Follow-Up on “Coping” Today

Project Co-Mind  videos are located here:


Now, about that coffee and VisGrips

35 thoughts on “Housing Rocks (but Softer)”

  1. Yes…The housing situation in Seattle and the Bay Area is here to stay forever…Even if the economy crashes…in your predicted 1929 like scenario…those two metro’s will emerge as the winners for the same set of reasons…The infrastructure will be already in place for a rebound.

    In the Bay Area, the driver is the emergence of thousands of new jobs with every passing month. As a result, companies like Saleforce with their new 1,100 ft high downtown high rise, Facebook with it’s new 2 million sq ft campus, Apple, with it’s nearly 3 million sq ft Spaceship campus and Google, with it’s proposed 5 million sq ft of downtown San Jose campus initiative have made it possible for tens of thousands of job applicants to relocate here. That puts a huge stress on available inventory and drives prices up. It’s a never ending conundrum. The more housing that is built just opens up more opportunities for people wanting to move here.

    And, having jobs is just part of the equation. Combine the very high paying jobs with geographical beauty, some of our planets best weather, incredible social, entertainment, sports, culinary, theater, and arts choices…and that is why today’s youth are flocking here by the bus loads. I came here 20 years ago from the Midwest…you couldn’t pay me enough money to ever consider moving back. I don’t even like visiting my midwestern home state any longer.

    The same goes with Seattle…minus their rainy, winter time weather, Everything else though is in check there. Plus…their spring, summer and fall weather are amazing…and the beauty of both the Bay Area and Seattle are what today’s millennials with top notch engineering degrees want.

    And, both cities have been through these crashes in 2001 and 2008/2009 and both emerged twice as strong than before…because being liberal also means being liberal with a build it and they will come mindset to fast track the building and planning infrastructure approvals. Both cities get things done fast…Same with Liberal minded New York. It’s no coincidence that the most robust cities in the world are liberal politically. Liberal has and always will equal pro- business.

    When you have available infrastructure during a recession…you have not only office vacancies…but intellectual capital looking for jobs…The office vacancies drive down cost per square feet…which creates opportunities for companies with new technologies to take advantage of the combination of IC and low office space prices to re-locate or start-up here. This is exactly what happened in 2001 and 2008/2009. We are in a new building boom…in both Seattle and the Bay Area. Over 30 million sq ft in the Bay Area is under construction. We are getting ready for another possible crash in 2019…where both cities will emerge out of the short lived downturn stronger and more capable of any metro in America to pick up the slack over more ultra-conservative and development shy cities in the Heartland. And the heartland will somehow blame the liberals on the downturn…when in reality…they are their own worst enemy.

    • Were it only so!
      I remember people I knew in the newsroom at CKLW in Detroit who told me virtually the same thing. I’d been talking to them about the new “imports” from Japan and would it rock the Detroit economy. No, Detroit was immortal, I was assured.
      A few years back 7-maybe? Elaine and I visited Detroit as past of the National Society of Newspaper Columnists.
      Some of what you mentioned is still in Detroit today: A generally (once) robust core. And a few really great companies like Quicken Loans which we toured.
      But the little people?
      Naw. Detroit went down when the UAW wanted more of a piece of pie. And the problem with the Internet is that leveling of EVERYTHING takes place.
      I have personally worked with programmers in Ukraine, Belarus, Latvia and elsewhere on projects. They know the new reality better than the billionaires of silly con valley: They don’t need to move anywhere. They can have their country and their lifestyle and all the rest.
      Damn shame we can import missions of empty square feet from Detroit, though.
      Leveling is a historical fact…and just like the market moves up and down, so do the futures of cities and those the imagine themselves The New (and special) City-States.
      Sit back in the next couple of years when pensions begin to blow up and Illinois reveals the bankruptcy of free lunch liberalism. Sorry to see it go, because like Camelot, it’s a nice myth.
      Enjoy it while you can, but put 10 percent a year in the escape and evasion fund!

      • Hi, G –

        ” really great companies like Quicken Loans”

        When Detroit was originally “Made Great”, the citizens lived in an economy that was a net importer of capital.

        Detroit was ‘Made Great Again’ by a company that writes debt, Quicken.

        I recall what happened to the debt writing machines during the last recession – Countrywide and GMAC financing anyone?

      • Fundamentally, there’s a key point Mark is missing here nothing lasts forever.

        Greece, Egypt, Minos, Rome, the empires of Spain, France & Britain. They had their time and then their decline. It took parts of Italy a 1,000 years to recover from the collapse of Rome. Look at Britain today. London is the only city that’s really in any sense prosperous. And it likely will be an epicenter of the coming festivities.

        San Fran will survive in the long run because it’s an excellent deep water harbor on a coast that only has a few. But the economy has to crash deep enough that the working middle can afford to live there. Not the engineers, the people who keep the day-to-day running. In 1982 they were busing McD’s workers in from Oakland and paying $10/hr, or so I was told when I was there. What happens when workerbees can’t afford to live in Oakland?

        This is Dread Empires fall, and nobody is getting away unscathed.

    • Mark,

      I think you are on to something.

      I’m near Detroit. The big thing in Detroit right now is Ford’s announcement of renovating a 500,000 Sq Ft train station that was abandoned 30+ years ago.

      Note: Ford started construction on Detroit’s Renaissance Center in 1973 right before the Oil Embargo. I’m calling the top in Detroit’s comeback right now.

    • ISTM after 15 years of nobody being able to afford the Bay Area products and services, the economy of which you speak would be: No more.

      All those millions of square feet of office space would be long-since turned into greenspace…

      The only places left relatively unaffected by the Depression were the Midwestern “corn belt” of which you’re so fond, the Australian farm belt, and the Argentine pampas. Every non-primitive society, everywhere else on the planet, took a fist in the chops. In a deep depression, food is not king — it’s everything, and it’s damn’ difficult to move from one location to another. How’re the growing seasons for non-irrigated staple grains (y’know, the stuff one can eat to survive, after the ships stop coming?), in SFA and SeaTac…?

      I appreciate your enthusiasm, but sheesh! Nothing built by Man lasts forever…

    • Amazon loves Seattle. So much that it gave the city council a taste of their own politics. You could hear the council squealing all the way up into the Cascade foothills.?

    • I was amazed and actually thought you was pulling our leg when you mentioned a while back that people bought homes in the bay area for a mill or more and that the kid out of diapers ( oops I mean school) was making a quarter mill or more.. where most of the country it is a fraction of that figure.. then the CBS evening News last night .. huge story about that area and the outrageous prices on homes and the cost of living the wage structures etc..
      they showed what was selling for a million plus..
      where I live we call that firewood.. and would be bull dozed under.. I was amazed..

      and yes you are right you cannot compare the bay area with detroit although.. it seems from what I am reading they are both going to look similar very soon.. Now.. you could buy a really nice house in missery.. oh Missouri.. and buy a plane for a reasonable sum the commute would be a little bit longer but heck.. my brother lived in one part of the country and commuted to chicago daily to go to work so if he can do it then it is doable ..say George did you sell your plane yet.. if not mark you might have a great place to buy a decent well taken care of mode of transportation to and from work.. the sales aspects of living in Missouri.. relatively low crime considering the two area’s ,reasonable housing costs, relaxed atmosphere, fine dining, and overall happy people.. heck you could sit out on a decent veranda and read a book and drink a pot of good coffee or maybe a lemonade slush.. yumm..

      • We sold the plane last year, lol. Wouldn’t have but the eyes are 20-30 on a good day and I’m just not comfortable flying transcons that way. Likle to see what I’m going to run into further head, lol

      • Yeah…nope!

        His commentary on home prices and availability is not an exaggeration. Neither is his statement on diaper dandies’ earnings. I know two personally; they’re kids of friends. I actually “created” one of them (BF’s kid) by assembling his study curriculum from grade-11 on.

        These kids are in their 30s now, but neither had college loan debt for more than two years post graduation, and neither used a dime of his salary to pay off his loans. They both lived in SFA at one time or another, and both moved to the Midwest after their Bay Area experience — one has a mail-drop apartment in Indianapolis, the other purchased 4.7 acres outside Greenville, Ohio, with a 6kft house in the middle. Their employers fly them wherever they need to be, whenever they need be there, or they commute. The one in OH was commuting to SFA because even 10 years ago, a daily hop from (probably) Dayton to ‘Frisco and back was ‘way cheaper than living there…

      • Missouri and low Crime??? Not so fast …I am from that eastern Missouri Dump of a town that happens to be the crime and murder capital of America. Year after year St. Louis swaps with Detroit, Newark and Baltimore as the most dangerous places to live in America. Me…I can leave my windows open all day…doors unlocked and come home to friendly neighbors dropping off goodies at my front door here in my Silicon Valley neighborhood. I have a nice home here already…There is absolutely no reason for me to live anywhere else but the paradise I live in now. As I stated before..the cost of living is all relative. You may pay more money here, but our salaries and wealth potential is exponentially high as well. It all evens out.

  2. If the first hour of the market is amateur hour, the last hour should be peofessional trader hour & the time to place trades for the next day. This is when the smart money is preparing for tomorrow. Just a theory, but could work out profitably.

    Have the President Trump bashers collected their freebie entitlements for the day. The working class has to pay so they have free time to protest.

    • Today, the last hour showed the market will be down at the open tomorrow. There was an upside breakout at 15:35 designed as a fake out to make you wonder, but did not stop the downside selling.

  3. You need some real facts here…Without trying to sound like a Bay Area commercial….You can’t compare Detroit to Seattle or San Francisco. Detroit has been hell on earth for far longer than I can remember. I used to travel there in the 80’s and it was awful then. San Francisco has always had a romantic quality and the powers that be here, took that and built an economy around it. Same with Seattle. The problem with Detroit is that it was a one trick pony. All automobiles…all the time…

    Although San Francisco’s recent success is built on computer tech, it’s far, far, from our only strength. The following are companies that have their world headquarters here..

    We are number one in Bio-tech…way too many companies to mention…We have a financial presence with Visa, PayPal, Wells Fargo, Franklin Templeton, Charles Schwab, Square, LendingClub, Robert Half, Firemans Fund, Fisher Investments, Coinbase, Lending Club etc.

    In food there’s
    Anchor Brewers & Distillers, Annie’s Homegrown, Black Angus Steakhouse, C&H Pure Cane Sugar, Clif Bar, Columbus Salame, Dreyer’s Grand Ice Cream, Ghirardelli Chocolate, Anchor Brewers & Distillers, Häagen-Dazs,Il Fornaio, Jelly Belly, Odwalla, Otis Spunkmeyer, PowerBar,
    See’s Candies, Shasta.

    In retail there’s Cost Plus Inc., Levi’s, Cycle Gear, Gap.com, Gymboree, Macys.com, Minted,
    Orchard Supply Hardware, Pottery Barn, Williams-Sonoma, Zazzle, Bebe, Everlane, JanSport
    Marmot, ModCloth, Mountain Hardwear, The North Face, O’Neill.

    I could go on and on in Aerospace with Sandia National Labs,Lawrence Livermore Labs, Lockheed Martin Space Systems, BAE Systems,L3 and NASA’s Ames Research facility…

    Consumer goods like the Clorox Company and Sephora, entertainment like Pixar, Netflix, Sega, LucasFilm, Industrial Light and Magic, Zynga, Pandora…

    Energy with Chevron, PG&E, Solar City, SunPower, Sungevity, and on and on…

    And don’t forget our tourism industry…One of the top go-to destinations in the world.

    We are not a myth…We are smart and diverse…That is the real reason why we have bounced back so quickly from each and every recession. That is why smart money settles here.

    • Read the other post Mark – Detroit is coming to get your industry with tax breaks and property at 10-cents on the dollar

      • George, They can incentify businesses al they want…it’s still Detroit. Nobody wants to live there. I can buy a house in Misery…I mean Missouri…for 1/10th of what I can buy one here. You couldn’t pay me enough to move back there. Everything is relative… I pay more here…I make more here…I am happier here with great weather, beaches, surfing mountains a few minutes away and a few hours drive to ski, hike or dune buggy in the dessert. Detroit isn’t stealing anything.

    • Lol lol..your memories of Detroit remind me of a guy I was in the military with. He spent one day to long in Vietnam.. He carried a and grenade everywhere it was his pocket toy..
      It use to make me nervous when we were doing guard and I was constantly telling him to put it away..why do you need one any way in the usa.. He would always say you never know when one will be needed.
      He was from Detroit in the early seventies.. He hitchhiker home.
      When he got back we were talking he said some joker picked him up. As they were crossing the bridge the guy pulled a gun on him. He said that’s when pulled the grenade out of my pocket with the pin pulled and said..there sure are a lot of nuts in the world aren’t there.. The guy let him out.

      Lol lol lol

      The sad part is from what I’ve been reading and from what I have seen on news coverages. SF has become a sewer of poverty and depravity comparable to any of the war torn regions of the planet and old abandoned industrial cities of America.
      Young college graduates maybe making huge sums of money but poverty level is just shy a quarter mill. If those that have the influence the funds to make the changes needed it will continue to erode.

  4. Dont want internet licensing but current practice may be creating more problems than the country can handle. Just wondering.

  5. I think the thing that surprised me the most.. was that poverty level is just shy a quarter mill in the bay area..here it is $3600.00.. so does that mean that everyone is making those kind of wages.. the fast food burger flipper grocery store stocker etc… ( I seriously doubt they are..) that would explain crime and violence and overall discontent.Kind of like Tennessee relying on world health services to bring health care to the people..

    Most of the kids aren’t lucky to have their education paid off and most generally have huge school loan debt.. of course that is why one in five and a half ladies in college is seeking a sugar daddy to help with expenses.. My brother also lives in the midwest.. his house has around six thousand square feet.. he lived where the cost of living was cheap and commuted to work.. what impresses me.. probably wouldn’t impress many others it wasn’t how big his house is..( the daily maintenance has to be a nightmare. .. but what I found impressive is his sewer line is six inch copper.. and his electric service is 800 amp.. now that impressed me. I didn’t even know they made sewer line six inches out of copper.. no clogged toilets there LOL. One what in the world would two people need with six thousand feet of living space and what the heck 800 amp. what are you running in that house. I could just see the grandkids racing up and down the halls LOL…. he was asking me about solar for his place. he definitely has the roof space.
    On the downside.. he did well made money hand over fist but .. I would never have wanted his lifestyle.. not that mine was much better.. since I worked day and night.

    • One news story they were interviewing preschoolers one young ladies response..its disgusting..they poop on the sidewalks.
      Now I am fairly confident when I assume mark that your an executive of some sort. If a dump in SF costs two mill.. Then something in a nice neighborhood is significantly greater. News stories galore about college gradds living in abandoned cars all making a decent living in all reasonable points of view.
      Now my question. On every bottom feeder job application there’s a question designed to see if a person is civic responsible.
      I donate time money and bend over backward in the community and people .are you and your neighbors actively working at improving the city. Keep it from looking any more like Detroit Beirut or syria

      • Looking out of the box…all professional jealousy. There has never been poop on the sidewalks…that’s an urban myth. College grads aren’t living out of abandoned cars…they make way to much money to sink that low. Now…I do know a lot of couch surfing college grads…that’s their choice…some do it to save as much as possible to buy a home. College grads have sacrifice and austerity in their DNA from their days in college. I did the same thing. I Lived miserly the first 3 years out of college.

        And yes…I am a real estate agent. My average sale in the Silicon Valley (the burbs) is $1.9 million. George can verify. It’s all relative. 30% of those sales are all cash purchases. The rest are averaging a minimum of 50% down. People have money here. A $2 million home here is not that big of a Deal to many.

  6. Well, that explains a lot!

    Mark, not fair agglomerating flyover attitudes to those from metro STL. I’ve been to every sh!thole city in the Midwest (that’d be every one with a pop above 100k), and most of the ones in the East and South. They all have their attractive side, which is the side shown in the travel brochures, but every one also has its dirty, nasty, seedy underbelly. I’ve been to downtown Detroit, the south side of Chicago, and inner-city Cleveland, all at-night, and in the past month. Frankly, ESL scares me more than all three of them put together, and it’s not the worst of the Saint Looie ‘burbs…

    I’m personally not a fan of Mizzery either, except KC, Rolla, and the area immediately surrounding Leonard Wood, nor most of ILL-inois north of I-70, FTM. I leave doors unlocked, heck, sometimes leave my keys in the car — never a worry. I don’t get “happy day baskets” from the neighbors though, but that’s probably because of the rack of rifles and the longbow just inside the front door…

    • I will correct myself. I hate St. Louis with a passion…from the burbs to the city itself…that place reeks of mediocrity and a lot of hateful people.

      But, Kansas City is one of my favorite cities in The Heartland. Progressive, clean, always moving forward. St. Louis still lives in the past. On their visitors and tourism bureau brochure, they still tout the 1904 Worlds Fair as one of their cities great achievements. Kansas City talks about the future…my kind of city.

      • I agree…

        And with respect to KC, the Missouri town is awesome, the Kansas town, not so much — great BBQ though…

  7. Real estate is saying to me stay put I think…first I got visually sucked in to beautiful tide pools and relatively cheap prices compared to here
    Those listings are now under 20 ft of lava. I recently made inquiry on something closer to home. I asked for dock depth and whether I could open the house up because I don’t want a formal dining room. I also mentioned I was a cash buyer. Nothing crickets zip listing agent refuses to respond to much trouble I suppose. I think I need to invest in the two rocks you mentioned for guidance.

Comments are closed.