As expected, the Case-Shiller/S&P Housing Index came out this morning and the accompanying press release goes like this:
“New York, July 30, 2013 – Data through May 2013, released today by S&P Dow Jones Indices for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, showed increases of 2.5% and 2.4% for the 10- and 20-City Composites in May versus April. Dallas and Denver reached record levels surpassing their pre-financial crisis peaks set in June 2007 and August 2006. This is the first time any city has made a new all-time high.
The 10- and 20-City Composites annual returns rose slightly from April to May as they posted the best year-over-year gains since March 2006. All 20 cities increased from May 2012 to May 2013 and from April 2013 to May 2013.
“The chart above depicts the annual returns of the 10-City Composite and the 20-City Composite Home Price Indices. In May 2013, the 10- and 20-City Composites posted annual increases of 11.8% and 12.2%, respectively. “
That’s often as far as the superficial press gets, but the real truth (experientially) of how the market is doing is not reflected in that first chart which is month-on-month change. Rather, it shows up in ther second chart which looks at prices over the long term. As you can see here, prices are still stuck back in 2004:
One other tip here, if you’re trying to make sense of things is this: Remember that these prices that Case-Shiller/S&P track are the prices paid.
What that doesn’t take into account is your costs if you are actually selling and moving.
While the nominal market price of the home may seem to be the same now as in 2004, you’d need to back out roughly 10% on the selling end to cover points, commissions, moving costs, and so forth. When you back out the actual experience of buying and selling, the net to the homeowner is likely back in early 2003 some time…
Which means? You’d be doing well to get out of a house what you paid for it in 2003.
But wait! There’s More! Just getting the same dollars our 10-years later doesn’t address inflation! You need to basck out a further 26.902% for inflation because $100-grand doesn’t buy as many CrackerJacks as it did in ‘99.
So on a purchasing power basis, what do you think? Sometime in 1999 or 2000?
Cheerful bastard, ain’t I?
Minding the Store?
You’ll have to forgive me if I take a cynicism pill this morning: With the Middle East peace talks starting up in Washington today, trying to avoid a global meltdown from starting in that part of the world, you’d think the boss would be on hand to offer encouragement and do some cheerleading for reasonableness.
Instead, the president is off to to Amazon’s new operation in Tennessee to talk about jobs and will offer something of a “grand bargain” to solve the nation’s job woes. Been waiting five years for something?
Oh goodie. I can hardly wait to see what kind of corporate tax breaks go to the big corps but not the little businessmen in this latest dispensation from on high.
To be fair, a 25% tax on manufacturing is a baby step toward onshoring a few jobs. But when congress can’t even figure out how to pass a legally required federal budget, the odds of this being anything other than a Same Old New Deal, good old college try, seems pretty damn slim.
Both political parties need to be held accountable for our fiscal trainwreck which is summaried as up against the pin:
Tomorrow, new GDP figures will be released and they’ll no doubt show that the total outstanding public debt is well above our GDP. Something that’s sure to come back and haunt us.
Oh…and in answer to the question “Who’s minding the store? You may not like the answer…
New Word of the Day
With the NY Times out this morning, laying bare the “Hype Over Hospital Ratings”, it’s time for another UrbanSurvival New Word du Jour:
Hypespitals. (PayPal me a nickel if you use it….)
More After This…
When the Saudis Speak…
Prince Alwaleed of Saudi Arabia is a realist: He’s quoted as saying that his country needs to hurry up its economic diversification out of petroleum because all the shale work in the US is a direct economic threat.
When a story like this makes the rounds, it usually has in impact on oil prices which have come down under $104 on the futures markets this morning.
What his princessness doesn’t mention is that while fracking is a short-term bonus for the US there are longer-term issues. For one, fracked wells tend to put out oil or gas in more of a “shark tooth spike” on production charts and they don’t follow the formerly predictable decline curves of conventional drilling. Also, there’s a lot of speculation that the long-term amount of energy recovered may be less, although much faster.
Then there’s the link between fracking’s ugly leftovers – water injection wells – linked to seismic activity which people up in Fracklahoma are experiencing now on a fairly regular basis including miniquakes like this one this week….or this one.
So yes, the prince is right, but just because fracking is a short-term fix for the world’s energy demand, there’s something of a balance to be struck between quick economic recovery and long-term (payback’s a bitch) from short production spikes along the top of Peak Oil. Sure, anaerobic oil may be real, but no way in hell can a million years of accretion being sucked out at present consumption rates be characterized as sustainable.
What the prince didn’t seem to mention was depletion in the Kingdom and rising water cut….but that’s one reason I don’t think oil will go under $100 until the economic bloodbath of a major downturn comes along in October/November. Just a dart, but an intelligent throw, I expect.
Somewhere in here I should mention the huge propane plant explosion in Florida last night. No one dead, 8 or more injured.
The New Terrorists?
We’ve been telling you for several years about the US war with Mexico…but it has been largely an invisible war, punctuated by inane comments about immigration balanced off by our border acting like a pressure relief valve for Mexico’s failed economy.
So this morning I’d draw your attention to a series of articles that begins to position Mexican cartels as terrorist organizations and which may presage more militarization along the southern border…
Later on this morning, the penalty for Bradley Manning’s release of classified information is expected. The prosecution side pictures him as a terrorism supporter, the defense saying it was an act of conscience.
I’d offer that the right to a speedy trial is mostly myth as any fool can plainly see: Manning’s arrest came on May 10, 2010. The decision coming later today…likely.
On the other hand, the Fort Hood shooting took place on November 5, 2009. That trial still hasn’t gotten underway, and may not until next week. And, simple multiple appeals are likely, it may not be decided in our lifetime.
Such a long delay in what seems like a clear-cut case mystifies more folks than me. But already the coverage of that one is ramping up.
With the release of almost 250 Taliban in an attack on a jail, the theory of Afghanistan being able to hold itself together is going up in smoke.
One particularly cynical UrbanSurvival reader suggested we arm both sides in these conflicts. (Which sounds like a variation on the old military saying “Kill ’em all and let God sort it out…“)
I grudgingly admit that might slow immigration to Europe….but even I am not that cynical….yet.
If You Smoked
Interpretive Headline School
I just don’t know how to take this headline….a commentary on America’s sexual attitudes or a great double entendre? “78 percent of young women approve of Weiner…” Uh….how’d they mean that? Gosh, I would have thought the poll would have come in closer to 69% regardless….
Are still in the US, says a report over here. Seems no one else wants ’em, either.
Say, you don’t think any of them have programmer offspring here, do you?
More after this…