Great news: your house is worth 18% less than last year

House prices are falling slightly less fast, according to today’s Case-Shiller data. Let’s celebrate? The 20-city home-price index was still down 18.1% in April (compared to April 2008), but that was an improvement over March’s 18.7% decline. Yale economist Robert Shiller, he of Case-Shiller fame, has been hitting the airwaves, talking about how this might be the beginning of the end. Consider that Denver, Washington DC, Cleveland and Dallas even saw their index values tick up (looking at seasonally adjusted data). A recovery in the making? Here’s where we now stand:

So, in the grand scheme of things, not exactly back to normal. We might also feel a little less secure considering data out today showing prime borrowers are more than twice as likely to be delinquent now as they were a year ago. To the extent that mortgage non-payment begets foreclosure and foreclosure begets cheap houses that keep prices down we might feel insecure about the “recovery.”

Although, as Shiller pointed out, at least we’re falling within the stress-test scenarios the Fed used to determine the health of the nation’s banks. So that’s good news. Check out this graph, from Calculated Risk:

Barbara!

Stocks Rally Further in Run-up to EU Summit

MOSCOW — Global stocks enjoyed one of their best days in weeks on Tuesday ahead of a summit of European leaders that’s expected to be dominated by calls to boost economic growth.

Europe remains the focus of attention across all financial markets in the run-up to the June 17 Greek election that could go a long way to determining the country’s membership of the euro as well as the future of the single currency zone.

gatesvp

No need for sarcasm here, this is actually great news. It’s now time for another 20% so that we can return to some form of sanity.

As a late 20-something earning twice the median family income for my region, I’d be happy to see prices drop even further.

My wife & I don’t own a car, and rent an apartment. We walk everywhere, we have money left over at the end of the month, but we’re still not convinced about buying a place at these prices.

And the story is the same for the vast majority of my 20-something professional friends. I have only handful of friends who can justify the extreme costs of home ownership in many regions of the country. As far as many of my friends are concerned, that index has a long way to go.

And let’s face it, if late 20-somethings aren’t buying homes, how do we sell more homes.
Barbara Kiviat

Oh, there’s almost always a need for sarcasm. But I completely hear what you’re saying. I’ve been talking to a lot of 20-somethings recently, first-time homebuyers jumping on REOs and short sales. Though I do seriously wonder how many of them would be wading in were it not for that $8,000 tax credit.
gatesvp

OK, I’ll concede the need for some healthy sarcasm
I’ve definitely heard several people talk about the $8k tax credit. And it’s probably the tipping point for some people.
If you take a place like KC where the median family income is between $40k & $45k and the median home price is $126k to $180k, then you’re probably pushing people into the “affordability” range. Especially for professional couples who are likely making more than $50k.

Of course, a glance at the metro region of KC actually shows that even these “cheap” home prices come with the high cost of urbanization. The $120k median gets you a 1-bedroom condo near the core of the city, or a 4000 sq ft new home on the outskirts of town. But living outside of the core of the city often carries a 30+ minute commute and demands multiple cars (and lots of maintenance). Last summer’s $5 gallons caused a crush of new transit riders who could not afford the price of gassing up (and would accept 1 hour commutes instead).

If $5 gas is breaking the bank, it’s probably a fair assumption that even established home-owners are far too stretched. For 20-somethings watching others suffer, I don’t know that $8k is really going to seal the deal. (but we’ll see, even I have been thinking about it)
Barbara Kiviat

You live in Kansas City without a car? You are my hero.