Tuesday, November 26, 2013

Comment on House Prices and Graphs

by Calculated Risk on 11/26/2013 01:32:00 PM

It appears house price increases have slowed recently based on agent reports and asking prices (a combination of a little more inventory and higher mortgage rates), but this slowdown in price increases is not showing up yet in the Case-Shiller index because of the reporting lag and because of the three month average (the September report was an average of July, August and September prices). I expect to see smaller year-over-year price increases going forward and some significant deceleration towards in early 2014.

Zillow's chief economist Stan Humphries said today: “Zillow’s own data, which excludes REO re-sales, shows the same markets that dominate the Case-Shiller indices – particularly some of the California markets – to be cooling. This suggests that Case-Shiller’s inclusion of REO re-sales is heavily skewing overall appreciation in these markets."

I also think many of us expect house price increase to slow.

Note: My image server (Google) was down this morning. Here are some graphs:

Case-Shiller House Prices Indices Click on graph for larger image.

The first graph shows the nominal seasonally adjusted Composite 10 and Composite 20 indices (the Composite 20 was started in January 2000).

The Composite 10 index is off 22.3% from the peak, and up 0.9% in September (SA). The Composite 10 is up 17.8% from the post bubble low set in Jan 2012 (SA).

The Composite 20 index is off 21.5% from the peak, and up 0.9% (SA) in September. The Composite 20 is up 18.5% from the post-bubble low set in Jan 2012 (SA).

Case-Shiller House Prices Indices The second graph shows the Year over year change in both indices.

The Composite 10 SA is up 13.2% compared to September 2012.

The Composite 20 SA is up 13.2% compared to September 2012. 

Prices increased (SA) in 20 of the 20 Case-Shiller cities in August seasonally adjusted.  Prices in Las Vegas are off 46.9% from the peak, and prices in Denver and Dallas are at new highs.

Case-Shiller CitiesThe last graph shows the bubble peak, the post bubble minimum, and current nominal prices relative to January 2000 prices for all the Case-Shiller cities in nominal terms.

As an example, at the peak, prices in Phoenix were 127% above the January 2000 level. Then prices in Phoenix fell slightly below the January 2000 level, and are now up 41% above January 2000. 

These are nominal prices, and as I noted above real prices (adjusted for inflation) are up about 38% since January 2000 - so the increase in Phoenix from January 2000 until now is about the change in inflation.

Two cities - Denver (up 44% since Jan 2000) and Dallas (up 30% since Jan 2000) - are at new highs (no other Case-Shiller Comp 20 city is very close).    Denver is up slightly more than inflation over that period, and Dallas slightly less.  Detroit prices are still below the January 2000 level.