Housing Storm

Expectations for home price declines are notably worse than where they stood last December.

The latest expectations set (as of May 22nd), with the one-year outlook (approximately) highlighted.

FUTURES	08May	08Aug	08Nov	09Feb	09May	09Aug	09Nov
Composite	-2%	-6%	-11%	-12%	-15%	-11%	-15%
Boston	-2%	-3%	-4%	-3%	-5%	-5%	-6%
Chicago	-2%	-4%	-6%	-9%	-11%	2%	-11%
Denver	-1%	-4%	-6%	-8%	-1%	-1%	-10%
Las Vegas	-4%	-10%	-20%	-18%	-20%	-20%	-22%
Los Angeles	-4%	-9%	-19%	-21%	-25%	-8%	-27%
Miami	-3%	-8%	-15%	-18%	-21%	-12%	-20%
New York	-1%	-3%	-5%	-8%	-10%	-13%	-17%
San Diego	-3%	-7%	-13%	-17%	-18%	-11%	-18%
San Francisco	-3%	-8%	-14%	-18%	-20%	3%	-22%
Washington	-3%	-7%	-11%	-13%	0%	0%	-16%

Here's the set on file from December 19th, with the one-year outlook (approximately) highlighted.

FUTURES	08Feb	08May	08Aug	08Nov	09Feb	09May	09Nov
Composite	-2%	-4%	-6%	-7%	-8%	-9%	-10%
Boston	-2%	-5%	-6%	-6%	-8%	-9%	-12%
Chicago	-1%	-2%	-3%	-4%	-4%	-5%	-6%
Denver	-1%	-3%	-4%	-7%	-8%	-9%	-12%
Las Vegas	-3%	-5%	-7%	-8%	-10%	-12%	-13%
Los Angeles	-2%	-4%	-6%	-7%	-8%	-9%	-11%
Miami	-3%	-6%	-10%	-14%	-14%	-16%	-17%
New York	-3%	-5%	-7%	-8%	-9%	-11%	-12%
San Diego	-2%	-4%	-5%	-6%	-8%	-10%	-12%
San Francisco	-2%	-4%	-6%	-8%	-10%	-13%	-15%
Washington	-3%	-5%	-6%	-8%	-8%	-10%	-11%

These are the changes. As you can see, expectations have mostly worsened in the one-year outlook, as it stood last December.

Change since Dec-19	08Feb	08May	08Aug	08Nov	09Feb	09May	09Nov
Composite		2%	0%	-4%	-4%	-6%	-1%
Boston		3%	3%	2%	4%	4%	7%
Chicago		0%	-2%	-3%	-5%	-6%	8%
Denver		1%	0%	1%	-1%	8%	12%
Las Vegas		2%	-3%	-12%	-8%	-8%	-7%
Los Angeles		1%	-4%	-12%	-13%	-16%	3%
Miami		4%	1%	-1%	-4%	-5%	5%
New York		5%	4%	3%	1%	1%	-1%
San Diego		1%	-3%	-7%	-9%	-8%	1%
San Francisco		1%	-2%	-6%	-8%	-7%	18%
Washington		2%	-1%	-3%	-5%	9%	11%

How did you do if you hedged by selling the futures contracts? Well, the calcs are imperfect (no spot prices available), but using the month C-S index values, here is an approximation (below). So far, these have been pretty good hedges, with the futures prices actually falling more than the estimated fall in spot prices in most cases.

For people in Las Vegas and Los Angeles, where spot prices have fallen by an estimated 17% and 16% since the last read in December, that would be a ton of good news.

Hedge Perf since Dec-19	08Feb	08May	08Aug	08Nov	09Feb	09May	09Nov
Composite		-2%	-1%	2%	4%	6%	-3%
Boston		-3%	-3%	-2%	-4%	-5%	-7%
Chicago		-1%	1%	2%	5%	6%	-8%
Denver		-2%	0%	-1%	1%	-8%	-12%
Las Vegas		-2%	3%	10%	8%	7%	7%
Los Angeles		-2%	1%	6%	7%	13%	-8%
Miami		-4%	-2%	1%	3%	3%	-7%
New York		-3%	-3%	-1%	0%	1%	2%
San Diego		-2%	2%	6%	9%	8%	-1%
San Francisco		-2%	2%	7%	8%	7%	-18%
Washington		-2%	1%	3%	5%	-9%	-11%

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