The Home Buyer's Korner

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July 31st, 2015

Guy looking up in color

Case-Shiller for July 2015 Reading

Case Shiller

The Case-Shiller Index is a backward reading report and provides that is two months old by the time the index is released and many not be the best index to understand the current pulse of the housing market, but does provide useful recent and backward looking information.

This week we got the Case-Shiller Index for May and it shows a seasonally adjusted 4.9 percent price increase from a year ago for the 20 metropolitan housing markets the index tracks and a 4.7 percent yearly price increase in the top 10 housing markets.  The year over year change is pretty much the same as April using the seasonally adjusted data and clearly shows that home prices are still climbing at double the rat of inflation and two and a half times higher than wage growth in America.  The U.S. National Home Price Index increased 4.4 percent in May 2015  Since the price low of March 2012, The 10-City composite index has increased 32.5 percent and the 20-City composite index has increased 33.5 percent since we saw the bottom in home prices in March 2012.  Looking back at the 2006 housing bubble, prices are now only down about 13-15 percent.

Below are all of the composite-20 index cities yearly price percentage change, using the seasonally adjusted data.   San Francisco home prices increased 9.7 percent from a year ago and Denver Colorado increased by 10.0 percent.  No composite-10 or composite-20 annual price gains are negative using the seasonally adjusted data and tweleve were above 4 percent annual price increases.  It’s certain to say that prices are un-affordable based on low paying jobs and stagnant wages.


Prices have normalized to 2000 levels.  The index value of 150 means single family housing prices have appreciated, or increased 50% since 2000 in that particular region. 


S&P publishes a national index for home prices which has increased 4.4 percent for the year.  S&P also comments on home prices versus inflation  Below is a quote from S&P:

Nationally, single family home price increases have settled into a steady 4 to 5 percent annual pace following the double-digit bubbly pattern of 2013. Over the next two years or so, the rate of home price increases is more likely to slow than to accelerate. Prices are increasing about twice as fast as inflation or wages. Moreover, other housing measures are less robust. Housing starts are only at about 1.2 million units annually, and only about half of total starts are single family homes. Sales of new homes are low compared to sales of existing homes.

With wages still stagnant one has to wonder how prices are just climbing back up to bubble years.  Of course inflation has increased over the past decade as well.


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