February 2009

Monthly Archive

real estate24 Feb 2009 01:35 pm

When Will California and Florida Hit Bottom?

Based on today’s calculated home price heat index data it is possible to use a linear approximation to guesstimate when home prices will bottom out. Here are the results for California and Florida:

When Will California Hit Bottom?
Time To Bottom Heat Index 1Yr Change City
21-29 months 1.08 -12% Chico, California
14-21 months 1.05 -16% Redding, California
12-23 months 0.96 -11% San Francisco - San Mateo - Redwood City, California
10-15 months 1.04 -22% Visalia - Porterville, California
10-18 months 0.98 -15% San Luis Obispo - Paso Robles, California
9-14 months 1.02 -21% Los Angeles - Long Beach - Glendale, California
9-14 months 0.99 -20% Santa Ana - Anaheim - Irvine, California
8-13 months 1.03 -25% Fresno, California
7-11 months 1.03 -29% Bakersfield, California
6-12 months 0.96 -21% Hanford - Corcoran, California
6-12 months 0.94 -20% San Diego - Carlsbad - San Marcos, California
6-14 months 0.91 -14% San Jose - Sunnyvale - Santa Clara, California
5-13 months 0.91 -16% Santa Cruz - Watsonville, California
4-9 months 0.91 -22% Oxnard - Thousand Oaks - Ventura, California
3-11 months 0.89 -18% Santa Barbara - Santa Maria - Goleta, California
2-5 months 0.89 -35% Riverside - San Bernardino - Ontario, California
1-7 months 0.87 -22% Napa, California
1-7 months 0.86 -23% Sacramento - Arden - Arcade - Roseville, California
1-8 months 0.87 -21% Oakland - Fremont - Hayward, California
0-5 months 0.85 -30% Madera - Chowchilla, California
0-7 months 0.85 -20% Santa Rosa - Petaluma, California
at market bottom 0.76 -31% Yuba City, California
at market bottom 0.76 -36% Vallejo - Fairfield, California
at market bottom 0.76 -33% El Centro, California
at market bottom 0.75 -34% Salinas, California
at market bottom 0.73 -38% Modesto, California
at market bottom 0.68 -41% Stockton, California
at market bottom 0.59 -50% Merced, California

 

 

When Will Florida Hit Bottom?
Time To Bottom Heat Index 1Yr Change City
47-62 months 1.16 -6% Tallahassee, Florida
29-38 months 1.16 -11% Jacksonville, Florida
21-30 months 1.08 -12% Gainesville, Florida
20-31 months 1.02 -10% Pensacola - Ferry Pass - Brent, Florida
17-24 months 1.12 -16% Lakeland - Winter Haven, Florida
17-27 months 1.02 -11% Panama City - Lynn Haven - Panama City Beach, Florida
15-20 months 1.11 -19% Orlando - Kissimmee, Florida
14-21 months 1.07 -16% Ocala, Florida
13-19 months 1.08 -19% Tampa - St. Petersburg - Clearwater, Florida
12-16 months 1.14 -25% Miami - Miami Beach - Kendall, Florida
11-17 months 1.06 -21% Deltona - Daytona Beach - Ormond Beach, Florida
10-15 months 1.04 -22% West Palm Beach - Boca Raton - Boynton Beach, Florida
9-13 months 1.06 -26% Fort Lauderdale - Pompano Beach - Deerfield Beach, Florida
8-14 months 1.00 -21% Palm Bay - Melbourne - Titusville, Florida
8-15 months 0.97 -18% Palm Coast, Florida
8-15 months 0.96 -17% Fort Walton Beach - Crestview - Destin, Florida
7-13 months 0.97 -21% Port St. Lucie, Florida
5-12 months 0.93 -20% Sebastian - Vero Beach, Florida
3-8 months 0.91 -26% Bradenton - Sarasota - Venice, Florida
at market bottom 0.79 -35% Naples - Marco Island, Florida
at market bottom 0.79 -34% Cape Coral - Fort Myers, Florida
at market bottom 0.76 -31% Punta Gorda, Florida

To calculate these figures, a heat index range of 0.75 to 0.85 is used as a proxy for the bottom of the local market.

Comments (4)
real estate24 Feb 2009 11:51 am

Most Devastated Cities

Reviewing the heat index calculations used to produce today’s animated real estate heat maps I noticed that some areas have fallen below the 0.85 index value that typically represents the bottom of a market cycle. Because these areas have overshot the bottom, I am calling them devastated cities:

Rank Heat Index 1Yr Change City
1. 0.59 -50% Merced, California
2. 0.68 -41% Stockton, California
3. 0.70 -19% Monroe, Michigan
4. 0.73 -38% Modesto, California
5. 0.74 -17% Detroit - Livonia - Dearborn, Michigan
6. 0.75 -34% Salinas, California
7. 0.76 -36% Vallejo - Fairfield, California
7. 0.76 -33% El Centro, California
7. 0.76 -31% Punta Gorda, Florida
7. 0.76 -31% Yuba City, California
11. 0.79 -35% Naples - Marco Island, Florida
11. 0.79 -34% Cape Coral - Fort Myers, Florida
11. 0.79 -13% Bay City, Michigan
11. 0.79 -12% Warren - Troy - Farmington Hills, Michigan
15. 0.81 -9% Greeley, Colorado
15. 0.81 -6% Jackson, Michigan
17. 0.83 -10% Flint, Michigan
18. 0.83 -8% Ann Arbor, Michigan

Comments (2)
real estate24 Feb 2009 10:53 am

California and Florida Continue Home Price Freefall

It’s interesting to compare Q3 and Q4 2008 home prices side by side. There exists an apparent resilience in many low-cost, mostly rural, locales. Maybe it should not be surprising that areas with home prices above $200,000 are most affected by the credit crunch that defines this terrible recession, with states such as California, Florida, and Nevada continuing their declines.

With some Morgan Stanley analysts predicting low inflation for the next 2 years, the road to rapid housing asset price normalization would seem to now lay solely with outright price declines.

As inflation remains tame and credit tight, even modest nominal dollar home appreciation in urban areas appears unlikely for the next one to three years. Complicating the picture is that real-dollar home values are cycling downward and once-booming parts of the U.S. have another 20% to 30% further to drop before turning upward.

Given the pervasiveness of the current credit crunch, it is not clear to me that any other path is at present possible (or desired) than to get the worst of the fall behind us so that we may begin anew to focus on a path of rebuilding, growth, and opportunity.

The pretty animations above are compiled from data released today by the OFHEO. Methodology is that of my original home price heatmap. For the data nerds out there, you can download the compiled numerical results for Q3 2008 and Q4 2008.

Colors on the heat maps are keyed as follows: red is for homes that are selling above their historical price trend and blue highlights those states with sale prices below their long-term inflation adjusted trend based on same-home sales data that spans over 30 years, from 1975 through June 2008. Typically regions experience approximately 20 year cycles with values ranging from 85% to 115% of baseline with each city area following the march of a different drummer. However in this most recent ramp up, all major U.S. cities (and anecdotally globally as well) synchronized to be on the same boom-bust cycle.

Comments (7)