Warren Buffet has repeatedly called for a housing recovery. The Obama Administration keeps calling for a “recovery summer.” Well, one of these summers they will both be correct. But will it be the summer of 2012?
If we use the Case-Shiller index performance as an indicator, not likely. The S&P/Case-Shiller index of property values in 20 cities fell 4 percent from a year earlier, after decreasing 3.9 percent in November. On a MoM basis, the 20 city index fell -0.50% from November to December.
On a non seasonally-adjusted basis, the CS 20 index stays in the penalty box (denoted by red), although you can see a slight downward trend since 2009.
Case-Shiller 20 versus FNC 20
If we compare the FNC 20 City index with Case-Shiller 20, we see that they are similar up until 2006. Then CS 20 begins to dive earlier than FNC 20, but then levels out starting in 2009. FN 20, on the other hand, doesn’t begin falling until Q4 2007 and has fallen steadily since.
If we compare the FNC 20 Index (which came out earlier) and the FNC 100 Index, we see that the housing bubble was more a function of the largest 20 metro areas rather than the rest of the country.
Typically, we see a seasonal rise in home prices in the Spring and Summer months ahead. But house prices continue to experience “low tide” despite the enormous government and Fed stimulus thrown at it.
Metro Area Levels
Even Washington DC fell in both December and over 2011! And Detroit was the only city to post a 2011 gain.
Atlanta was the biggest loser by far at -12.8%. Perhaps people finally got around to eating at “The Varsity” near Georgia Tech and decided to flee Atlanta.
On a month-to-month (MoM) basis, Detroit was the biggest loser and Phoenix was the biggest winner.
Is This The NEW “Recovery Summer?”
The economy is allegedly recovering (the CBO said so!), although Durable Goods Orders dropped 4% in January.
There is a seasonal factor to home price indices so they will tend to rise in the Spring and Summer. But is it a sustainable growth pattern when it occurs? I don’t have much confidence in a REAL “recovery summer” for 2012.
