CASE SHILLER HOME PRICE DATA WHATS THE LATEST RELEASE TELLING US

With the excitement of the Super Bowl upon us, watching the scores is a completely normal way of gauging where the game stands. When it comes to economic data, however, this approach can make it difficult to see the real patterns. One headline that I have heard several times over the past day or so is that the recently released Case Shiller home price data shows that prices have continued to decline and are now back to 2003 levels. While this is true, keeping track of the score in this fashion misses the bigger point. Yes, we are back to 2003 pricing. And, yes, we remain far off peak pricing. What is more critical is that there has been limited if any real pricing improvement in almost all the markets Case Shiller covers. The chart below, graphs Case Shillers 20 markets. I decided to graph the indexes starting in 2008 to remove the impact of the peak pricing after all it is going to be a long time before we get pack to those levels. I also recognize that the chart is not a good graphic because of the number of lines represented it is difficult to discern one market from another due to the closeness and line colors. That is not what to focus on, though. Instead, notice the pattern which the chart does show quite well. If you put the month-tomonth static aside, there have been almost no pricing gains since 2009. This, I think, is the biggest takeaway from Case Shillers November data. Although unemployment is improved and we have begun to add jobs, at least through November, consumer uncertainty keeps a housing recovery from gaining steam.
CASE SHILLER HOME PRICE INDEX (Not Seasonally Adjusted)
Atlanta 230 Boston Charlotte 210 Chicago Cleveland 190 Dallas Denver 170 Detroit Las Vegas 150 Los Angeles Miami 130 Minneapolis New York 110 Phoenix Portland, OR San Diego San Francisco Seattle 50 Tampa Washington, DC

90

70

Source: Case Shiller; Standard & Poors; Walter S. Bialas.

Composite-20

Walter Bialas has more than 25 years of real estate advisory experience in consulting, banking, and development. He has served as chair of ICSCs North American Research Task Force and is an active member of ULIs Advisory Services program. He can be reached at 703-919-8553 or by email at wbialas@verizon.net.

February 2012