I agree with Daniel. If you look at the C-S index, it shows the huge run-up in prices. Shiller certainly thinks there is a housing bubble. I don’t think anything is nefarious about the C-S data. As I mentioned when posted the latest C-S data a few days ago (the data are released on the last tuesday of every month, if you are interested just go to the S & P website and hunt for it), there are some reasons why the index may not have completely tracked the top of the boom and also reasons why it may lag somewhat on the decline. But in my opinion people are getting too bent out of shape about month to month declines. Expecting a 20% drop in six months is just another form of speculative mania. If this is a bust (and I think it is), the decline is likely to be a slow, long grind. Check back in four years, not four months.
I love the “look at the flipper in trouble” listings. Schadenfreude is a delicious pleasure in very small doses. But, these listings are anecdotes, not data. In a market that is completely flat forever (but with some variability in pricing around a flat mean) it will of course be possible to find properties that lose (and make) money YOY. In a market that is declining 2-5% a year nominal, you will find even more losers. If you are looking for the losers, you’ll find them.
Anyway, I hope I am wrong. I am tracking some zip codes in LA because I want to buy. I would love a swift 40% decline…I just don’t think it is going to happen.
