Dec 27, 2012 | Housing Analysis
The U.S. housing market continues to make home price gains.
Earlier this week, the S&P/Case-Shiller Index showed home prices gaining 4.3 percent during the 12-month period ending October 2012, marking the largest one-year gain in home prices since May 2010.
The Case-Shiller Index measures changes in home prices by tracking same-home sales throughout 20 housing markets nationwide; and the change in sales price from sale-to-sale. Detached, single-family residences are used in the Case-Shiller Index methodology and data is for closed purchase transactions only.
Between October 2011 and October 2012, home values rose in 18 of the 20 Case-Shiller Index markets, with previously-hard hit areas such as Phoenix, Arizona leading the national price recovery.
The top three “gainers” for the 12 months ending October 2012 were :
- Phoenix, Arizona : +21.7 percent
- Detroit, Michigan : +10.0 percent
- Minneapolis, Minnesota : +9.2 Percent
Only Chicago and New York City posted annual home value depreciation. On average, homes lost -1.3% and -1.2% in value, respectively.
It should be noted, however, that the Case-Shiller Index is an imperfect gauge of home values
First, as mentioned, the index tracks changes in the detached, single-family housing market only. It specifically ignores sales of condominiums, co-ops and multi-unit homes.
Second, the Case-Shiller Index data set is limited to just 20 U.S. cities. There are more than 3,000 cities nationwide, which illustrates that the Case-Shiller sample set is limited.
And, lastly, the home sale price data used for the Case-Shiller Index is nearly two months behind its release date, rendering its conclusions somewhat out-of-date.
That said, the Case-Shiller Index joins the bevy of home value trackers pointing to home price growth over the last year. The Federal Housing Finance Agency (FHFA), for example, reported similar home price growth with its October 2012 House Price Index (HPI).
Home values rose 0.5 percent between September and October 2012 nationwide, the FHFA said, and climbed 5.6 percent during the 12 months ending October 2012.
Economists attribute increasing home prices to higher buyer demand, record-low mortgage rates and the gradual improvement of the U.S. economy.
Nov 28, 2012 | Housing Analysis
The housing market continues to expand.
According to the S&P/Case-Shiller Index, which was released earlier this week, U.S. home prices rose in September for the sixth straight month, climbing 0.3% as compared to the month prior.
On an annual basis, values are higher by 3.0%.
The Case-Shiller Index findings are a composite reading of 20 U.S cities, 17 of which showed home price gains in September. Detroit and Washington D.C. showed slight declines, and New York City showed no change.
Leading the recovery, though, appears to be Phoenix, Arizona. The previously hard-hit city has seen home values gain 20.4% over the last 12 months. Also noteworthy is that Atlanta, Georgia reversed 26 consecutive months of home value declines in September, posting a +0.1% annual growth rate.
Average U.S. home prices have climbed back to mid-2003 levels.
On a month-over-month basis, value change by city varied. San Diego, California and Las Vegas, Nevada both posted gains of 1.4 percent from August, leading the Case-Shiller Index’s 20 tracked cities. Minneapolis, Minnesota and Phoenix showed gains of 1.1 percent.
Los Angeles, California rounded out the Top Five, posting a 1% gain month-over-month.
Despite the index’s strong findings, however, we should remember to temper our expectations. The Case-Shiller Index — like most home value trackers — is wildly flawed. Buyers in Massachusetts should follow its gospel with caution.
Here’s why.
First, the Case-Shiller Index tracks values for single-family homes only. As a result, it doesn’t account for multi-unit homes or for condos and co-ops. This is a big deal in cities such as Chicago and New York where high-rise units are common.
Another flaw in the Case-Shiller Index is that it’s 60 days delayed. It’s nearly December yet we’re still reviewing data from September. In housing market terms, September was a different market. Real-time data trumps data from last season.
That said, the long-term trends as shown by the Case-Shiller Index, are overwhelmingly positive. As a Case-Shiller Index spokesperson remarked, “It is safe to say we are now in the midst of a recovery in the housing market.”
Oct 31, 2012 | Housing Analysis
Home value rose to close out the summer, according to the S&P/Case-Shiller Index, a national home-valuation tracker.
Nationwide, values rose 0.9% between July and August 2012 with 19 of 20 tracked markets showing improvement. Only one tracked city — Seattle, Washington — showed a decrease, falling just 0.1 percent.
On an annual basis, 17 of the 20 Case-Shiller Index markets improved, led by Phoenix. Home values in the Arizona city are up 18.8 percent from August 2011. The next closest city in terms of home price gains is Detroit, Michigan at 7.6 percent
We should temper our excitement for the August Case-Shiller Index, however. Although it suggests an ongoing U.S. housing recovery, the methodology of the Case-Shiller Index is far-from-perfect. In fact, one could argue that the index is more effective for policy-makers than for actual buyers and sellers of real estate.
There are three reasons for this :
- The Case-Shiller Index tracks home prices of single-family homes only. Multi-unit homes are excluded.
- The Case-Shiller Index can be distorted by “discounted” home sales (e.g.; foreclosure, short sale).
- The Case-Shiller Index publishes on a two-month delay — data is hardly current.
Beyond the above three points, however, the Case-Shiller Index falls short in another area — it ignores the basic tenet of housing that “all real estate is local”. In using 20 cities to represent the entire United States, the Case-Shiller Index reduces more than 3,100 municipalities into a single “market”.
Even within its 20 tracked cities, the Case-Shiller Index fails short as a housing market barometer. This is because — even with cities — home values vary. Some Worcester County area zip codes perform better than others, for example, as do some streets. The Case-Shiller Index can’t capture markets with that level of detail.
National housing data helps in spotting broader trends of growth but provides very little for today’s active buyers and sellers of real estate who need “real-time” data. For that, talk to a local real estate agent.
Oct 2, 2012 | Housing Analysis
There have been no shortage of “housing market” stories lately. After sinking through much of late-last decade, home values slowly stabilized into mid-2011. By October 2011, values appeared to have bottomed.
Today, nearly five-and-one-half years after the April 2007 housing market peak, home prices are finally showing their ability to rebound. Over the past 12 months, a bevy of housing market data highlights broad-based market growth.
For example, as compared to August 2011, Existing Home Sales are up 9.3 percent nationally; New Home Sales are up 27.7 percent nationally; and home inventories have slipped to multi-year lows in Worcester County area and throughout the country.
Furthermore, multiple home value trackers show home prices rising both regionally and nationwide.
Last week, the government’s Federal Housing Finance Agency released its Home Price Index (HPI) — a metric which tracks how home values change between sequential property sales. HPI showed home values up 3.7% nationally.
Another home valuation tracker — the S&P Case-Shiller Index — has shown home values to be rising, too.
As compared to one year ago, the private-sector metric puts home prices higher by 1.2 percent via its 20-city composite. 20 cities remains a small subset of the broader U.S. population, but, in looking for a trend, it’s clear that the trend is a positive one.
Some of the Case-Shiller Index highlights from its most recent report :
- All 20 tracked cities showed home price gains between June 2012 and July 2012
- The previously hard-hit city of Phoenix now leads the nation with a 16.6% annual gain
- Versus their respective lows, San Francisco and Detroit are up 20.4% and 19.7%
In addition, on a 12-month basis, only four cities are showing negative home value growth — Atlanta, Chicago, Las Vegas, and New York City.
The Case-Shiller Index is a national index, though, and specifically does not report on valuation changes in specific U.S. cities and their neighborhoods. For local real estate data, make sure to speak with a local real estate agent instead.
Sep 6, 2012 | Housing Analysis
Home prices continue to rise nationwide.
According to the Standard & Poor’s Case-Shiller Index, home prices rose 6.9% between the first and second quarter of 2012, the largest quarter-to-quarter gain since the home-value tracker’s 1987 inception and another signal that the housing market is in recovery.
The private-sector metric’s results are similar to what the government’s Home Price Index showed for June, too — values rising quickly. In addition, for the second straight month, each of the Case-Shiller Index’s 20 tracked markets showed month-to-month improvement.
June would have marked three straight months if not for Detroit’s value-setback in April.
The top performing markets in June, as tracked by the Case-Shiller Index were :
- Detroit, Michigan : 6.0 percent gain
- Minneapolis, Minnesota : 4.8 percent gain
- Chicago, Illinois : 4.6 percent gain
However, it should be noted that the Case-Shiller Index pulls from a limited sample set. It does not include condominiums or multi-unit homes in its findings, nor does it account for new construction. These exclusions make a material impact on the results of both Minneapolis and Chicago, as examples. Both cities feature a large concentration of condos. (more…)
