Case-Shiller is out with its February numbers. The positive spin is that the rate of decline is decreasing, the bad news is that house prices are still declining. Here is the table:

Since I live in Phoenix right now which is more of less ground zero for this implosion, let me offer a couple of comments.

I keep hearing reports from bottom fishers around town that the action at auctions is fast and furious. Some of the more disciplined buyers report being outbid. I don’t have any firm numbers but I suspect there is some fairly aggressive investor activity in the market, which raises a question. Are we painting ourselves into another corner?

No doubt a lot of these investors would like to see a quick flip. I think the prevailing logic is that they are buying below market and will see a sharp upward adjustment in prices as the inventory is absorbed. There is a lot of hope that sales levels revert to mean in that assumption. But are they as a group creating a market overhang that’s going to act as a cap on prices. 

I don’t think this group of investors represent as much of a foreclosure risk as the group that bought a few years ago — these buyers should be able to eke out some cash flow — but they might very well see their investment horizon stretched.

The other comment I would offer is purely anecdotal, so take it for what it’s worth.

I live in more of less the central part of Phoenix. It’s an area that hasn’t suffered greatly from the housing crisis and encompasses some very high income neighborhoods as well as some upper middle income areas. Over the past couple of weeks I’ve noticed a striking number of retail vacancies cropping up throughout the area.

The companies that occupied these properties were well established businesses with a regular clientele. Many had been in business for decades serving the locals. They were places that you take your vacuum cleaner to be repaired or buy swimming pool supplies. It’s more than a little disconcerting and brings the severity of this recession a bit more into focus.

Enough musing. Let’s see if I can find something a little more focused to write about.