categories
Recent Comments
- Real Estate News You Can Use 5-17-12 | Upstate-South-Carolina.com on First-Quarter 2012 Shadow Inventory Update: National Liquidation Rates Moderate, While Regional Differences Widen
- U.S. Home Builder Sentiment Rises 5 Points In May | Standard & Poor's HousingViews | real estate investors | Scoop.it on U.S. Home Builder Sentiment Rises 5 Points In May
- S&P Case Shiller Index « on Videos: Robert Shiller Interviews on WSJ and Fox Business
- Investors buying up all the homes in Vegas? - Page 6 - City-Data Forum on Comparing Cities
- The Guessing Game | Standard & Poor's HousingViews | real estate investors | Scoop.it on The Guessing Game
tags
10-City Composite 20-City Composite Atlanta Boston Chicago condo prices David Blitzer Detroit Economy and Real Estate Existing Home Sales home prices Las Vegas latest results Los Angeles Miami MSAs New York Phoenix regions residential real estate S&P/Case-Shiller S&P/Case-Shiller Home Price Indices report S&P/Experian Consumer Credit Default Indices San Francisco Tampa US Housing Prices
WP Cumulus Flash tag cloud by Roy Tanck requires Flash Player 9 or better.
The posts on this blog are opinions, not advice.
Please read our disclaimers for Ratings Services, Indices, Equity Research, Securities Evaluations and Risk Solutions
Please read our disclaimers for Ratings Services, Indices, Equity Research, Securities Evaluations and Risk Solutions
2 Comments
Given the high transaction costs of real estate (which I’m guessing are not factored in) then the situation in Atlanta et al is actually far more off putting.
You are right Garreth, transaction costs are not part of these data. We look at the first and second sale of the same house to determine the price difference. We also try to ensure that all transactions are arms-length. Given that the sale has taken place, we know that the buyer and seller both have accepted all transactions costs, whether high or low.
The bigger the rise, the harder the fall? Not always.
Looking across the 20 MSAs followed by the S&P/Case-Shiller Home Price Indices you can see one unfortunate trend, home prices are down. Location, however, did play a role in the magnitude of the decline; just as it did in the rise during the mid-2000s.
During the recent housing cycle, the MSAs peaked roughly over a two-year time span, with Boston the earliest (September 2005) and Charlotte NC the latest (August 2007). The two Composites were roughly in between with the 10-City peaking in June 2006 and the 20-City in July 2006.
As seen by the graphs below, it is apparent that the geographic area roughly defined as the Sun Belt saw the largest run-up in prices in the early-to-mid 2000s and, consequently, some of the largest percent decline. Using January 2000 as a base, Miami home prices grew by about 180% when it reached its peak in December 2006. Subsequently the market has fallen by more than 51% through March 2011. Los Angeles, San Diego and Tampa all grew by more than 135% and all fell by 38% or more. Las Vegas and Phoenix also posted lofty growth rates of 135% and 127% but have fallen by about 59% and 56%, respectively.
S&P/Case-Shiller Regional Home Price Indices. Sources: S&P Indices and Fiserv.
As of March 2011, eleven cities have fallen by more than 30% from their relative peaks (as have the 10- and 20-City Composites) and these are largely confined to the Sun Belt – Las Vegas, Los Angeles, Miami, Phoenix, San Diego and Tampa,– the Mid West – Chicago, Detroit and Minneapolis, – and the North West – San Francisco and Seattle.
However, not all cities saw the types of increases witnessed by the Sun Belt cities detailed above. Chicago, Detroit and Minneapolis saw peak prices above 2000 levels of only 69%, 27% and 71%, respectively; yet all three have fallen by more than 30% from their relative peaks. Cleveland and Dallas only rose about 25% from 2000 to their relative peaks, but have since fallen by 22% and 11%, respectively. With March 2011 index levels below 100, Atlanta, Cleveland, Detroit and Las Vegas are the markets where average home prices are below their January 2000 levels, meaning home prices have lost any and all of the appreciation in value of the past eleven years. At 100.27, Phoenix is not far behind. For many of these MSAs, unemployment rates remain very high, contributing to the lack of relative demand for home purchases in these markets.