The April Case Shiller index values have been released and the results show continued price drops in most cities forecasted.  In a strange twist, however, prices appear to be levelling off in several of the forecasted cities.  Potential buyers should beware of false hopes for a bottom as this may just be a mirage before the continued storm of relentless price drops.  Don’t forget that interest rates were artificially deflated for a few months due to the Fed’s intervention in the markets.  The artifically low 4.5% 30 year mortgage rates were short lived, and jumped almost 30 percent in a single day at the end of May.


If you are watching the Case Shiller index values to find a housing bottom and time a buying opportunity, here are a few guidelines you may with to consider:

  1. Look for a trend based on at least 3-4 months of Case Shiller values.  False bottom signals can appear frequently and give the potential buyer false hope.
  2. Don’t get fooled into rushing your purchase based on the $8,000 tax credit.  The $8,000 is not going to help the buyer who loses $20,000 to $50,000 or even more from a 10% annual depreciation.
  3. Don’t get fooled into buying because of low interest rates.  Real estate agents love to push this bad advice on perspective buyers – “Buy now before rates go up”.  The best time to buy is when interest rates are high and demand and prices are low!

And now, here are the latest Case Shiller values.  The chart below has the last 4 months of data transposed, but you can get the raw data here if you like.

case-shiller-april-2009