New home price data out today, in the form of the Case-Shiller Index.
CNBC Interview with Standard And Poor's David Blitzer regarding the Case-Shiller index.
Transciption of Interview:
CNBC Interview with David Blitzer, S&P 500 Index Committee Standard & Poor's managing director/chairman
Date: 10-27-2008
Interviewers: Erin Burnett, Mark Haynes, CNBC Squawk On The Street
Erin Burnett: We want to talk about the latest housing data to come out. S&P/Case-Shiller’s new report says the downturn in residential real estate, continues, no surprise. There are not many bright spots, but here are the overall numbers. Prices down 16.6% in August from a year ago. Joining us first on CNBC to dissect the data, Standard and Poors’ David Blitzer, chairman of the S&P 500 Index Committee.
Date: 10-27-2008
Interviewers: Erin Burnett, Mark Haynes, CNBC Squawk On The Street
Erin Burnett: We want to talk about the latest housing data to come out. S&P/Case-Shiller’s new report says the downturn in residential real estate, continues, no surprise. There are not many bright spots, but here are the overall numbers. Prices down 16.6% in August from a year ago. Joining us first on CNBC to dissect the data, Standard and Poors’ David Blitzer, chairman of the S&P 500 Index Committee.
Now David, I just have to be blunt, my main question sir, on this data, is that it’s August [August data]. And that appears to be ions ago, because it was before sort of the world fell apart. So can you give us an honest assessment of the relevance of this data, whether things have dramatically accelerated from here?
David Blitzer: I think what we’re beginning to see, what we see the beginnings of in this data, and what we’ll see as we roll forward over the next several months, are the impact of foreclosures more than anything else.
Based on discussions we had yesterday, we’re definitely seeing foreclosures begin to show up here. And the initial impact will be to continue the price fall, probably accelerate the price decline, throughout the Sunbelt cities that we’ve been worried about so much over the last year or more, and so on. That’s where the foreclosures are likely to be concentrated, that’s where the price impact will be. What it means for the overall index, is we’re going to see increasingly a split. The Sunbelt, Miami, Tampa, on the East Coast. Phoenix, San Diego, Las Vegas, Los Angeles, and rolling in San Francisco, even though it may not be sunny, on the West Coast. Those areas will continue to go down.
David Blitzer: I think what we’re beginning to see, what we see the beginnings of in this data, and what we’ll see as we roll forward over the next several months, are the impact of foreclosures more than anything else.
Based on discussions we had yesterday, we’re definitely seeing foreclosures begin to show up here. And the initial impact will be to continue the price fall, probably accelerate the price decline, throughout the Sunbelt cities that we’ve been worried about so much over the last year or more, and so on. That’s where the foreclosures are likely to be concentrated, that’s where the price impact will be. What it means for the overall index, is we’re going to see increasingly a split. The Sunbelt, Miami, Tampa, on the East Coast. Phoenix, San Diego, Las Vegas, Los Angeles, and rolling in San Francisco, even though it may not be sunny, on the West Coast. Those areas will continue to go down.
Other parts of the country are beginning to show some stability. And my guess is, by the end of this year, when we’ve had a lot more data about housing in the recent turmoil, we will see a clearer split in the division. We’ll see signs of recovery in parts of the Northeast, and in some other spots around the country. But the Sunbelt, unfortunately, is going to have a long, long way to go.
Mark Haynes: So that, kind of that, crescent from Florida, across the South up to California is the problem area. The Northeast…we had some pretty good property appreciation in the Northeast; ah, ah, ah, what I mean is, during the bubble, so…
David Blitzer: yeah, [nervous laughter] we don’t have any recent good property appreciation at any price unfortunately.
David Blitzer: That’s true, but…Northeast, I mean if you look at Boston for a moment. Boston was the first city to peak way back in September in 2005. So that’s 3 years back, you know, which is a long time for half of the housing cycle, which is what we’re going through.
So I think between time, and the fact that you didn’t have the kind of rampant development in sections of the Northeast; because there wasn’t that much empty land to rampantly develop. That’s going to mean a little bit more stability, and that’s where you’ll begin to see some more improvement.
New York is a bit of a wild card because of financial services; and, you know, we all, unfortunately, know that story. But, I think we’re going to see this, sort of, splitting off. The Sunbelt continuing to sink, or sink even more quickly over the next few months because of foreclosures. The rest of the country, beginning to get toward stability.
No place, or price, is about to go sky high, or straight up. That’s a 2009 or 2010 story, according to most of the people we hear from.
Erin Burnett: David, thank you, as always, for being with us, we appreciate it. David Blitzer with Standard and Poors’ on that latest data on the housing market.
Mark Haynes: So that, kind of that, crescent from Florida, across the South up to California is the problem area. The Northeast…we had some pretty good property appreciation in the Northeast; ah, ah, ah, what I mean is, during the bubble, so…
David Blitzer: yeah, [nervous laughter] we don’t have any recent good property appreciation at any price unfortunately.
David Blitzer: That’s true, but…Northeast, I mean if you look at Boston for a moment. Boston was the first city to peak way back in September in 2005. So that’s 3 years back, you know, which is a long time for half of the housing cycle, which is what we’re going through.
So I think between time, and the fact that you didn’t have the kind of rampant development in sections of the Northeast; because there wasn’t that much empty land to rampantly develop. That’s going to mean a little bit more stability, and that’s where you’ll begin to see some more improvement.
New York is a bit of a wild card because of financial services; and, you know, we all, unfortunately, know that story. But, I think we’re going to see this, sort of, splitting off. The Sunbelt continuing to sink, or sink even more quickly over the next few months because of foreclosures. The rest of the country, beginning to get toward stability.
No place, or price, is about to go sky high, or straight up. That’s a 2009 or 2010 story, according to most of the people we hear from.
Erin Burnett: David, thank you, as always, for being with us, we appreciate it. David Blitzer with Standard and Poors’ on that latest data on the housing market.
