In Depth Analysis: CalculatedRisk Newsletter on Real Estate (Ad Free) Read it here.

Wednesday, November 27, 2013

Zillow: Case-Shiller House Price Index expected to show 13.9% year-over-year increase in October

by Calculated Risk on 11/27/2013 06:08:00 PM

The Case-Shiller house price indexes for September were released Tuesday. Zillow has started forecasting Case-Shiller a month early - and I like to check the Zillow forecasts since they have been pretty close.   It looks like another very strong month ...

From Zillow: Zillow Predicts October Case-Shiller Will Show Still More Inflated Appreciation

The Case-Shiller data for September came out [Tuesday], and based on this information and the October 2013 Zillow Home Value Index (ZHVI, released Nov. 26), we predict that next month’s Case-Shiller data (October 2013) will show that both the non-seasonally adjusted (NSA) 20-City Composite Home Price Index and the NSA 10-City Composite Home Price Index increased 13.9 percent on a year-over-year basis. The seasonally adjusted (SA) month-over-month change from August to September will be 1 percent for both the 20-City Composite and the 10-City Composite Home Price Indices (SA). All forecasts are shown in the table below. Officially, the Case-Shiller Composite Home Price Indices for October will not be released until Tuesday, Dec. 31.
The Zillow Home Value index continues to show moderation in home value appreciation, with several of the largest metros showing month-over-month declines in October, as well as a fair amount of volatility in home value growth as the housing recovery continues. Case-Shiller indices have also shown slowdowns in monthly appreciation, but have not yet recorded monthly declines (at least not in their seasonally-adjusted monthly numbers). Even when the Case-Shiller indices do begin to show monthly depreciation in some areas, they will continue to show an inflated picture of home prices, especially when considering year-over-year growth. The Case-Shiller indices are biased toward the large, coastal metros currently seeing enormous home value gains, and they include foreclosure resales. The inclusion of foreclosure resales disproportionately boosts the index when these properties sell again for much higher prices — not just because of market improvements, but also because the sales are no longer distressed.
The following table shows the Zillow forecast for the October Case-Shiller index.

Zillow October Forecast for Case-Shiller Index
 Case Shiller Composite 10Case Shiller Composite 20
Case Shiller
(year ago)
Oct 2012158.66156.72146.03144.26
(last month)
Sept 2013180.03176.19165.66162.19
Zillow ForecastYoY13.9%13.9%13.9%13.9%
Zillow Forecasts1 180.7178.2166.3164.1
Current Post Bubble Low 146.45149.62134.07136.87
Date of Post Bubble Low Mar-12Jan-12Mar-12Jan-12
Above Post Bubble Low 23.4%19.1%24.1%19.9%
1Estimate based on Year-over-year and Month-over-month Zillow forecasts