Black Swan Insights

My favorite leading indicator for the housing market is Altos Research's 10 city composite index which is reported on a monthly basis, giving you a heads up on what to expect from Case-Shiller. The news from December was not good--and is probably enough to keep Banana Ben up at night wondering how many more Federal Reserve notes need to be created from thin air. The report pretty much confirms the trend that housing is officially in a double-dip scenario, despite the Fed's illegal money printing. It will also provide the Fed with an excuse to implement QE 3 sometime in mid-2011. From the report:

December 2010 Highlights

The Altos 10-City Composite is now at $448,996, off 1.63% from last November 2010.

All 27 of the major markets tracked by the report showed seasonal price decreases. Most were relatively minor, with the steepest declines seen in San Francisco (down 4.77%), San Diego (down 3.71%), and Minneapolis (down 3.16%), respectively.

Housing inventory is off by 5.89% nationwide, with dramatic decreases in several major markets, including Boston, San Francisco, and Seattle.

The declines shown reflect expected seasonal downturns.

About the only positive from the report was the slight decrease in housing inventory. Thought that does not seem to be helping prices at the moment. But don't expect this trend to continue according to Altos. Home sellers usually wait to list a property in the spring because that is the best time from a seasonal perspective. Altos anticipates that the level of housing inventory will increase as sellers try to capitalize on the most active period for the housing market. The only question left if how much farther do prices fall during the double-dip. The major banks better pray the answer is not too much more because that would trigger more write downs of already insolvent institutions (here's looking at you BAC).

Black Swan Insights

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One of my favorite home price indicators is Altos Research's 10 city composite. It is a leading indicator for Case-Shiller. Today Altos Research reported more bad news for the housing market with price declines reported in 25 of 26 markets. Overall, nationwide prices fell 1.6% in October and are no down 3.09% over the last three months. Here are the highlights from the report:

November 2010 Highlights

The Altos 10-City Composite is now at $458,518, off 1.60% from last month.

Home prices fell in 25 of the 26 markets covered in the report.

Cities that felt decreases most sharply were San Diego (-3.28%), Salt Lake City (-3.27%), and Phoenix (-3.11%).

Three of the 26 markets covered in this report showed increases in inventory, and nationally, inventory was down 4.64%.

Housing Trends

In what is becoming a familiar pattern, the Altos 10-City Composite fell in October 2010. The index was off 1.52% in September and another 1.60% during October to $458,518. These decreases are in line with our Q4 expectations, though weekly declines in prices are slowing. December’s report should indicate less dramatic price declines, with a few bubbly exceptions.

San Diego showed the most significant decreases, with prices falling there by 3.28%, signaling that even in markets that have been less affected by the economic downturn are feeling the pinch of the strained economy. Other markets showing significant decreases were Salt Lake City, with a drop of 3.28% and Phoenix – the market that feels the most risky-- with a drop of 3.11%.

Housing Supply

As was the case in September, inventory across the country is decreasing, in some cases, significantly. Washington, DC had the biggest decrease at more than 16%, and inventory rose slightly in Las Vegas, Phoenix, and San Diego. Typically, decreases in inventory are evidence of a leveling off; that markets are settling. However, the spectre of shadow inventory remains, bringing with it questions about how foreclosures and short sales are being counted. The Altos 10-City index fell 4.64% in September.

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Words of Wisdom from Leonardo da Vinci

1. I have been impressed with the urgency of doing. Knowing is not enough; we must apply. Being willing is not enough; we must do.

2.Simplicity is the ultimate sophistication.

3.Life well spent is long.

4.Life is pretty simple: You do some stuff. Most fails. Some works. You do more of what works. If it works big, others quickly copy it. Then you do something else. The trick is the doing something else.

5. Marriage is like putting your hand into a bag of snakes in the hope of pulling out an eel.

Black Swan Insights

The Housing Double Dip Intensifies---Altos Research

Home Prices Decline 1.6% In October--Altos Research