Comparing the Cities

Now that we have three months in a row with all 20 cities showing monthly gains, people want to know how far we are from the all time highs and how soon we will set new record highs. Answers to either question differ from city to city.   Dallas and Denver are closest to their record high prices — these experienced less boom and less bust than the others, so their recovery hasn’t had as far to climb.  Moreover,  with only about a five percentage point difference from the record high, we could see either one set a new record high sometime in the next year.  The story is less encouraging for most of the others. Even Washington DC with its stable employment base and government-related economy is down more than 20% from its peak while the Sunbelt cities face deficits of 40% to 60%. The chart shows how the cities compare:

Source: S&P/Case-Shiller Home Price Indices, July 2012 data

The table provides more details across the 20 cities and the two composites. As shown by the composites, overall home prices are 30% below the preaks seen in 2006.  Without another housing boom like the one seen in the early 2000s, it will take a some time to get back to the peak levels.   From 1987 to 2000 the 10-city Composite rose at a 3.6% compound annual rate.  At that pace, it will take about seven and a half years to rise 30%. However, inflation and the economy over the 1987-2000 period were stronger so seven and a half years may be optimistic.

Source: S&P/Case-Shiller Home Price Indices, July 2012 data