Tiered-price behavior differs across markets.

S&P Indices publishes tiered price data for 16 of the 20 cities (MSAs) it covers. The tier breakpoints are price levels that divide monthly sales pairs into thirds in each MSA. Home price trends in cities do not behave the same across and within tiers. Beginning in 2010, both Atlanta and Chicago saw their low-tiered markets go into a steep decline.  Chicago’s market seems to be on the mend; the same cannot be said for Atlanta.

In Atlanta, all three tiered indices closely followed each other until about the middle of 2010. When the Atlanta market peaked in 2007, all of the tiers saw price appreciation of about 30-40% from their January 2000 levels. Since then the low-tiered market has fallen sharply, far outpacing the decline in the other tiers particularly in 2010 and 2011. The low-tiered market reached the lowest level in its 20-year history in August 2011 (reported on October 25th) with an index level of 57.04.  While not a historic low, the middle-tiered market reached a post-bubble low in August.

S&P/Case-Shiller Atlanta Tiered Home Price Indices. Sources: S&P Indices and FiServ

The chart above shows that Atlanta’s low-tiered market sees average home prices about 43% below what they were in January 2000, more than 11 years ago; whereas the high-tiered market is still about 9% above 2000 levels. Over the past 12 months alone, the low-tiered market fell by 38.9%, the high-tiered market fell 4.3% and the aggregate market is down only 6.3% over the same time period.  From their peak, Atlanta low-tiered home prices are down 58.7%, the high-tiered market is down 21.5%, and the aggregate market is down 25.2%

For much of 2010 and the first half of 2011, the Chicago market was displaying similar behavior patterns, but has rallied since about May 2011. While the low tiered market had risen more than the others at its 2006 peak, the rate of decline in that market had far outpaced other home prices in that region. The low-tiered market reached its crisis low in April 2011 with an index level of 84.24.  As of August 2011, the index level was 94.12, up 11.7% from the low.

S&P/Case-Shiller Chicago Tiered Home Price Indices. Sources: S&P Indices and FiServ.

The chart above shows that Chicago’s low-tier market is seeing average home prices about 6% below what they were in January 2000; whereas the high-tiered market is about 22% above 2000 levels. Over the past 12 months the low-tiered market fell by 18.2%; whereas the high-tiered market fell by only 4.0% and the aggregate market was down 5.8%. From their peak, Chicago low-tiered home prices are down 48.7%, the high-tiered market is down 24.1%, and the aggregate market is down 29.2%.

To put this into more perspective, compare what is happening in Atlanta and Chicago to San Diego. San Diego’s low-tier market is seeing average home prices about 58% above what they were in January 2000; whereas the high-tiered market is about 52% above 2000 levels. In other words, since 2000 low-tiered homes have hung on to more of their value than the high-tiered market, completely different than what we see in Atlanta and Chicago. Over the past 12 months, the low-tiered market fell by 4.8%; whereas the high-tiered market was down 5.2% and the aggregate market was down 5.5%. From their peak, San Diego’s low-tiered home prices are down 46.8%, the high-tiered market is down 32.2%, and the aggregate market is down 38.1%. 

S&P/Case-Shiller San Diego Tiered Home Price Indices. Sources: S&P Indices and FiServ.

Post-housing crisis, Atlanta and Chicago stand out as two cities where low-tiered home prices went through very steep declines, with Atlanta still suffering. Four years after the bubble burst, it seems that the sub-prime crisis is not over for these two markets. In Atlanta, we are not yet even seeing signs of stability.

The posts on this blog are opinions, not advice.
Please read our disclaimers for Ratings Services, Indices, Equity Research, Securities Evaluations and Risk Solutions.

4 Comments

  1. P. Chung says:

    Thank you for your analysis. Very interesting stuff. BTW, do you have this kind of analysis for Los Angeles and Orange County markets? I would like to see those, if possible.

    Thanks again!

  2. T Haynes says:

    How can I access tiered price data from 2009 for the Atlanta area?

Post a Comment

Thank you for submitting a comment. We ask you to use the comment guidelines to promote thoughtful and productive discussions. Your comment will be approved before it will be posted. Thank you for your patience.

Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

  • CATEGORIES

  • Recent Comments

  • Tags