Note. November 2021 data is the latest available from Case-Shiller as I write this on January 25, 2022. The data is a 3-month moving average so what they call November is really the September-November average.

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USA – Up 19%

U.S. 12-month house price appreciation peaked at 20% in August, the highest since at least 1988 which is the earliest Case-Shiller data. The 12-month price increase in November at 19% was still way above the 14% gains in September 2005 which was the peak of the Great Real Estate Bubble.

New Record Home Price Appreciation (12-mo. Nominal)

3 metros set new appreciation records – at least since Case-Shiller started keeping records for those cities.

  • Dallas – Up 25%
  • Charlotte – Up 23%
  • Atlanta – Up 22%

Metro Markets More Synchronized

This reflects the trend of U.S. real estate markets becoming more synchronized.

In the S&L real estate bubble of the late 1980s, pretty much only cities in the Northeast and California had bubbles. In fact, Texas house prices were still falling while prices were increasing fast in the Northeast and California.

During the mid-2000s and now, however, more cities were caught up in the real estate bubble and no cities had falling prices at the same time.

House Price Appreciation – Real

Phoenix house prices appreciated faster than in any of the other metro areas covered by Case-Shiller. Real, inflation-adjusted house prices increased 22% over the previous 12 months in Phoenix AZ.

For the U.S. as a whole, real, inflation-adjusted house prices went up 10% from November 2020 to November 2021.

House Price Momentum – Nominal

U.S. house prices still have huge upward momentum. For the U.S. as a whole, nominal house prices increased 9 percentage points faster in the last 12 months compared to the previous 12 months but I expect price momentum to start falling.

We’ll start to see metros where appreciation for the last 12 months will be less than the previous 12 months. The narrative about house prices will slowly change to one of “slowing momentum.”

Home Prices

The Case-Shiller Home Price Index for the USA is now 276 which means nationally single-family houses have appreciated 176% since January 2000 (nominal prices of homes of the same quality over time).

Amount You Can Borrow/$1 Peaked Last January

When interest rates fall you can borrow more money with the same monthly mortgage payment.

How Much You Can Borrow with a $1,000 per Month P&I Mortgage Payment

  • Jan 7, 2021 = $248,000
  • Jan 20, 2022 = $221,000

The amount you can borrow with the same monthly P&I mortgage payment fell 11%.

Real Monthly Mortgage Payment Price Index

When you adjust the Case-Shiller Home Price Index for both inflation AND mortgage rates, you can see that house prices aren’t so crazy high.

Prices by this measure now almost match the peak of the S&L Bubble. Notice that prices by this measure did fall for a few years after the S&L peak in the spring of 1989 and then prices were more or less flat for several years.

House prices were increasing in late 2020 but mortgage rates were falling. Since January of 2021, however, house prices have been increasing fast but they aren’t being offset at all by lower mortgage interest rates anymore. In fact, mortgage rates have also been increasing for the last year which increases the monthly payment price for house buyers.

Note. You can find interactive versions of most of these charts here.