{"id":28044,"date":"2012-03-07T09:56:01","date_gmt":"2012-03-07T14:56:01","guid":{"rendered":"http:\/\/countingpips.com\/fx\/2012\/03\/07\/the-spcase-shiller-index-and-housing\/"},"modified":"2012-03-07T09:56:01","modified_gmt":"2012-03-07T14:56:01","slug":"the-spcase-shiller-index-and-housing","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2012\/03\/07\/the-spcase-shiller-index-and-housing\/","title":{"rendered":"The S&#038;P\/Case-Shiller Index and Housing"},"content":{"rendered":"<div align=\"left\"><script type=\"text\/javascript\">\ntweetmeme_style = 'compact';\n<\/script><br \/>\n<script type=\"text\/javascript\" src=\"http:\/\/tweetmeme.com\/i\/scripts\/button.js\"><\/script>\n<\/div>\n<p>The S&amp;P\/Case-Shiller is a composite index of home price indices for 20 major metropolitan statistical areas in the United States. The index is published monthly by Standard &amp; Poor&#8217;s and uses the Karl Case and Robert Shiller method of a house price index using a modified version of the weighted-repeat sales methodology. This method is able to adjust for the quality of the homes sold, unlike simple indices based on averages.<\/p>\n<p>The Case-Shiller Index was developed in the 1980s by three economists: Allan Weiss, Karl Case and <a title=\"The Robert Shiller Interview: The Author of Irrational Exuberance and Yale\u2019s \u201cTop Gun\u201d Fires Away on Real Estate Stocks and the Secrets of Investing\" href=\"http:\/\/www.investmentu.com\/2006\/September\/20060921.html\">Robert Shiller<\/a>. These same three later founded a company to sell their research; that company was purchased by Fiserv, Inc., which tabulates the data behind the index. The data is then distributed by Standard &amp; Poor&#8217;s.<\/p>\n<p>Let me try to get to the core of what\u2019s going on. Each index from the 20 different areas measures the changes in the prices of single-family houses using the repeat-sales method. This process takes a look at and compares the sale prices of the same properties over time. New construction isn\u2019t included because they\u2019re new and have no previous price by which to compare &#8211; these houses haven\u2019t been previously sold, and there\u2019s no way to calculate how their sale prices have changed.<\/p>\n<p>The indices, aside from the national index, are published on the last Tuesday of each month at 9 AM EST. There\u2019s a two-month lag time in the data that\u2019s reported, so the report issued last Tuesday only covers home sales through December.<\/p>\n<h2><strong>Housing Market Bottoming?<\/strong><\/h2>\n<p>The S&amp;P\/Case-Shiller composite index declined 0.5% on a seasonally adjusted basis, in line with economists&#8217; expectations, after falling 0.7% the month before. Single-family home prices ended 2011 on a downbeat note as a drop in December prices sent the seasonally adjusted index down to 136.63, which is its lowest level since 2003.<\/p>\n<p>&#8220;After a prior three years of accelerated decline, the past two years has been a story of a <a title=\"One Opportunity In This Awful Housing Market\" href=\"http:\/\/www.investmentu.com\/2011\/August\/housing-market-opportunity.html\">housing market<\/a> that is bottoming out but has not yet stabilized. Up until today&#8217;s report we had believed the crisis lows for the composites were behind us,&#8221; David Blitzer, Chairman of the Index Committee at Standard &amp; Poor&#8217;s, said in a statement.<\/p>\n<p>&#8220;The pick-up in the economy has simply not been strong enough to keep home prices stabilized. If anything it looks like we might have reentered a period of decline as we begin 2012.&#8221;<\/p>\n<h2><strong>The State of the Housing Market<\/strong><\/h2>\n<p>Here\u2019s the skinny: The numbers have shown that there\u2019s an uptick in activity, but that\u2019s not translating into rising prices. The main culprit for this is an imbalance between supply and demand.<\/p>\n<p>Michael Feder, CEO of real estate data and analytics firm Radar Logic, says his firm\u2019s daily readings on the market show a shifting mix of housing activity away from the foreclosure-related or distressed sales in favor of more traditional sales.<\/p>\n<p>\u201cSellers are acquiescing to the new reality in pricing,\u201d Feder says. The demand for housing is out in the market, but buyers are going to take the risk of further price depreciation. There\u2019s a line in the sand and they won\u2019t pay more. Unlike earlier in the downturn, sellers are finally coming to grips with the reality of what they can get. While that sounds encouraging, Feder is quick to warn that the general sentiment in the market is cautious.<\/p>\n<p>And another cautiously optimistic voice out there is Karl Case, who lends his name to the index. The numbers have historically showed that the number of households usually grows by at least 1 million to 1.5 million every year. That number actually fell between March 2010 to March 2011, as young people stayed with their parents and more people shared homes.<\/p>\n<p>But from March to December, the number of households picked up again. It\u2019s just a question of how long it will take for demand to catch-up with supply and kick the <a title=\"Markets Point to Economic Recovery in 2012\" href=\"http:\/\/www.investmentu.com\/2012\/March\/economic-recovery-2012.html\">recovery<\/a> into another needed gear.<\/p>\n<p>Good Investing,<\/p>\n<p>Jason Jenkins<\/p>\n<div>\n<a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=fbKBBz1xuJw:zHVkFn2Lc-8:yIl2AUoC8zA\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?d=yIl2AUoC8zA\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=fbKBBz1xuJw:zHVkFn2Lc-8:V_sGLiPBpWU\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=fbKBBz1xuJw:zHVkFn2Lc-8:V_sGLiPBpWU\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=fbKBBz1xuJw:zHVkFn2Lc-8:qj6IDK7rITs\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?d=qj6IDK7rITs\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=fbKBBz1xuJw:zHVkFn2Lc-8:gIN9vFwOqvQ\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=fbKBBz1xuJw:zHVkFn2Lc-8:gIN9vFwOqvQ\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=fbKBBz1xuJw:zHVkFn2Lc-8:F7zBnMyn0Lo\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=fbKBBz1xuJw:zHVkFn2Lc-8:F7zBnMyn0Lo\" border=\"0\"><\/img><\/a>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/InvestmentU\/~4\/fbKBBz1xuJw\" height=\"1\" width=\"1\" \/><\/p>\n<p>Article by <a href=\"http:\/\/www.investmentu.com\/\" target=\"_blank\">Investment U<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"<p>The S&amp;P\/Case-Shiller is a composite index of home price indices for 20 major metropolitan statistical areas in the United States. The index is published monthly by Standard &amp; Poor&#8217;s and uses the Karl Case and Robert Shiller method of a house price index using a modified version of the weighted-repeat sales methodology. This method is &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/www.investmacro.com\/fx\/2012\/03\/07\/the-spcase-shiller-index-and-housing\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;The S&#038;P\/Case-Shiller Index and Housing&#8221;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-28044","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/28044","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=28044"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/28044\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=28044"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=28044"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=28044"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}