Some charts of the falling Case-Shiller Housing Index

The latest Case-Shiller home price index came out earlier this week. They show decreases in the 20 city composite of 2.5% November 2008 to December, and the most damning statistic is the decline of 26.7% from the housing peak in 2006.

The results are more obvious visually. I think the relevant comparison is from today's prices to the earlier peaks. Here is the full data for all of the cities (click the picture for larger) showing data from 1987 to today. The index is 100 in 2000. The peak is quite obvious and the current fall off even more so.

I took the indices after the peak and looked at the % decrease as a fraction of the peak index, essentially using the peak as the basis. The numbers look even scarier then.

The places in which home values have evaporated the most dramatically are cities in California, cities in Florida, Phoenix and Las Vegas. The California housing bust seems to be a combination of speculation and general California high home values. The other cities appear to reflect a bust in speculation on vacation homes and second homes. Detroit stands out as an example of a city whose housing prices are gutted because the car industry that built the city has fled.

Another way to see what places are down a lot and what places are down a little is to look at a map.
Here the are of the bigger circle is the index at the peak, and the area of the circle inside is the index in December. The more the circles shrink the more the value is lost. I like this view more than the percentages because you can see that, for instance, Detroit has lost a lot but they weren't as high as the cities in California or Florida, so there is more value per house being lost in the California cities than in Detroit.

I suppose that because it was a housing bubble, it eventually had to burst and was built on speculation rather than a sustainable increase in value. The question is how far will it burst.

Market Indicators for fun and profit

Somewhat for my own benefit and because of some discussions I have been having with others, I have been collecting market indicators in an attempt to find the one that best captures, for me, the turmoil in the markets and the various sectors of the global financial system that are affected. This means not only stock market indices, but something to capture the credit crisis, the housing crisis and the price of oil and gasoline (perhaps other commodities later).

Firstly, places to find charts of the world stock market indices:

For the United States, Google Finance reports the Dow Jones Industrial Average, the S&P 500 and the NASDAQ (really NASDAQ is the stock exchange and the Nasdaq Composite is the index).

The Nikkei 225 is an index for the Tokyo Stock exchange. Nikkei 225 charts at Google. Nikkei 225 charts at Yahoo.

The Hang Seng is an index for the Hong Kong stock exchange. Hang Seng charts at Yahoo.

The FTSE 100 is an index for the London Stock Exchange. FTSE 100 charts at Yahoo.

Two other items of interest in recent times have been housing prices and oil prices:

The Case-Shiller index follows housing prices in 20 cities and normalizes them to a baseline of 100 in January of 2000. Standard and Poors has downloadable files of the S&P/Case Shiller Home Price Index each month. A look at the past few years shows the nice bubble that is one of the things causing the financial crisis. You can't always have prices of things run ahead of salaries.

More data than you can stand about oil prices, volumes and its related products is available at the Energy Information Administration. I started with the US imports of oil by country tables here and clicked various other buttons on the petroleum navigator bar at the top of the page.

Finally, I was looking for an indicator of the credit crisis:

The TED spread has been mentioned in a few blogs of late(TED Spread quote at Bloomberg). I myself was looking for an indicator to understand the credit crunch part of the problem. How can one see whether banks are lending to each other or not. I settled for the LIBOR which is the interbank lending rate. The TED spread takes this further. TED stands for T-Bill for treasury bills and Eurodollar which refers to the LIBOR rate and often involves loans between euros and dollars. It is the LIBOR 3-month rate minus the 3 month T-bill rate. The reason for that is that the T-bill rate is a measure of the least risk you can undergo loaning money for 3 months, everyone expects the US government to pay back the money on a T-bill. Loaning money between banks is riskier so the LIBOR tends to be higher, the TED just subtracts the baseline least risk. Usually this number is 0.5% but lately it has been shooting up to 4% and 5%, an obvious indication of banks unwillingness to loan to one another and a reflection of the credit crunch.

Are there other favorite indices that my readers are using to understand the crisis that might be helpful?