Last Friday, when we noted that many home-buyers were suddenly getting off the dime, brokers from all over the country chimed in with similar observations. Now perhaps we know why. The Case-Shiller data for August 2008 was published this morning, showing the biggest one-month drop in the 20-city composite index since its inception in 2000.
The data substantiate what I had noticed this weekend just browsing listings in the Berkeley Hills, where an old listing alert showed homes now struggling to sell for a price they had commanded in 2002 or 2003:
The Case-Shiller data is considered more reliable than data from the National Association of Realtors because it excludes the distorting effects of remodeling and new construction, considering only sales on properties that sold before in essentially the same condition.
The price declines have been steepest in already-hard-hit San Diego, LA, San Francisco and DC, while Boston barely declined at all. While Case-Shiller has a nearly two-month measurement lag, our sense is that the trend continued in September and October, with inventory already on the market slashing prices.
Who knows where the bottom is, but especially in Southern California, DC and Seattle, we are seeing value-shoppers crawling out of their bunkers and snorfling around at the inventory. As noted by James Surowiecki at the New Yorker, the National Association of Realtors estimated that existing home sales jumped 5.5% in September, and now the Census Bureau reports that new home sales increased 2.7% in September.