October 31, 2008

S&P Case-Shiller home price indices

Standard and Poor (S&P) has an index of home prices. Its called the Case-Shiller Home Price Indices. The Case-Shiller index covers home prices for certain major metro areas in the USA. They track the individual major cities and then also track a 10 city and 20 city composite index.

The locations tracked are :
AZ-Phoenix, CA-Los Angeles, CA-San Diego, CA-San Francisco, CO-Denver, DC-Washington, FL-Miami, FL-Tampa, GA-Atlanta, IL-Chicago, MA-Boston, MI-Detroit, MN-Minneapolis, NC-Charlotte, NV-Las Vegas, NY-New York, OH-Cleveland, OR-Portland, TX-Dallas, WA-Seattle

The Case-Shiller index was developed by Karl E. Case and Robert J. Shiller. The index measures repeat sales of single family homes. They compare sale prices of individual homes over time. So for example if a home is sold in 2003 for $250k and then sold again in 2005 for $260k and then sold later in 2008 for $255k then this constitutes 2 data points. They look at all the single family home sales and track the increases or decreases in the data points over time.

The Case-Shiller index gives a good general index of home values nationally. The S&P site has data for the index going back to 1987. So you can use this as housing data for the 20 metro areas for the past 21 years.

Nationally the index trend for the past 21 years looks like this:

For just the past few years since 2004 the national trend with the peak of the boom and then the current bust looks like this:
Looking at the last few datapoints in summer of 2008, it looks like the rate of decrease is slowing. Hopefully this is a sign that the bust may be bottoming out. Lets keep our fingers crossed.

One thing I like about the S&P Case-Shiller indices is that they track specific markets. Usually reports in the news are based on national numbers but as we all know every market is different. I look at the index trends for a few select markets since 1991 below. I pulled out a few markets from around the country to show how different cities compare. :
As you can see Los Angeles had the biggest boom and bust and the difference between L.A. and other markets is pretty extreme. But L.A. prices are still well above other markets for the longer term period. L.A. started around 94 in 1991 and then peaked at over 270 last year in 2007 and is now down to 189 as of August 2008. So that was a +187% boom followed by a 30% bust. But from 1991 to 2008 the prices in L.A. are still up about 101%.
The best market shown was Seattle which went from 64.6 in 1991 up to 192 last summer and is now down to 175. Thats a boom of 197% and a bust of 9%. Detroit was the worst market of those shown. They started at 57 in 1991 and then peaked at 127 in 2005 and then is now down to 92 currently. So that was a +122% boom followed by a 27% bust.

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