As reported in another recent post on March 7 to this Harris Real Estate site, the S&P Core Logic Case Shiller National Home Price Index just released for December 2017 indicated that annual home prices increased 6.3%.
We know that the Case Shiller Index is based upon a “rolling” three-month average of data. Translated, this latest release is based upon data from 10/17, 11/17 and 12/17.
Wolf Richter, noted financial and housing journalist, believes that this rolling data indicates that home prices, “…thanks, to radical and experimental monetary policies, (have been) reflated by 46% since the bottom of the housing bubble.”
Richter has analyzed Case Shiller Home Price Index data by city since pre-financial crisis/housing bubble in the early 2000’s. From his analyses, he foresees a second housing bubble, or Housing Bubble 1 and Housing Bubble 2 as he calls them, happening now.
Here is Richter’s thinking by city:
Home prices edged down in Boston, the third decline in a row after 22 months of increases. However, despite the downward trend, Boston still shows a +5.5% y/y due “only” to home prices surging upward earlier in 2017. During what Richter calls Housing Bubble 1, home prices in Boston skyrocketed 82% from 200-2005. The Case Shiller Index shows that home prices in Boston now exceed peak home prices during housing Bubble 1 by 12.2%.
The Case Shiller Index indicates that Seattle’s home prices increased .7% y/y in 12/17. This represents a new peak to Seattle home prices despite a downtrend that began to develop earlier in the year. Overall, Seattle home prices are 21% from the peak of Housing Bubble 1 in 7/2007 and 80% from the bottom of Housing Bust1 in 2/2011.
The Index indicates Denver home prices have increased +0.5% m/m, the 26th consecutive month in a row of increased home prices. Year/year Denver’s increase is +7.4% and 45% from its peak in 7/2006.
Dallas – Ft. Worth
Dallas – Ft. Worth home prices have edged up m/m for the 47th month in a row. Year/year home prices are up 6.9%. Since 6/07, Denver’s home prices have skyrocketed 43%…this price surge, according to Richter, has been “stunning and relentless.”
Though Case Shiller indicates that Atlanta home prices have remained flat for 4 months, the Index surge has increased 70% since 2/12. Prices are up +5.4% y/y and are now +3% above the peak of Housing Bubble 1.
Home prices in this city have ballooned 123% since 2000. Though essentially flat for 5 months running, Portland’s home prices have increased +6.8% y/y and have skyrocketed 73% since 2012, a good +20% above the peak of Housing Bubble 1.
San Francisco Bay Area (San Francisco, Alameda, Contra Costa Marin San Mateo Counties)
The home price index for the Bay Area has jumped 153% since 2000. Year/year home prices are up 9.2%. Month/month home prices in 12/17 increased +0.5% after jumping +1.4% in 11/17 and +1.2% in 10/17. To top it all off, Home prices in the Bay Area are +32% from Housing Bubble 1 and up +86% from the end of Housing Bust 1 in 2009.
Home prices in Los Angeles are up +7.5% y/y as of 12/17. Prices are only -1% away from where they were during the peak of housing price insanity in 2006.
New York Condominiums
Because of the size of the condo market in New York, Case Shiller has a special index category for this market. In 12/17, this index was up +3.6%. Money from Wall Street and global investors has kept the market from plunging. Now up +17.5% from the prior its prior price peak, the New York condo market has surged 173% in 17 years.
All of this data can be a bit overwhelming…just remember that the data represents asset-price inflation when the dollar loses its purchasing power with regards to assets like houses. And, keep your eyes, ears and brains open to changing trends so you as the real estate professional are aware of housing bubble formations and bursting in any city.