Inflation-Adjusted Case-Shiller Home Price Index Will Surpass 2005-2006 Peak Bubble Prices Soon.

Note. November 2020 data is the latest available from Case-Shiller as I write this on January 26, 2021. The data is a 3-month moving average so what they call November is really the September-November average.

Phoenix house prices have been appreciating faster than in any of the other metro areas covered by Case-Shiller since October 2018. Real, inflation-adjusted house prices increased 12% over the previous 12 months in Phoenix.

For the U.S. as a whole, real, inflation-adjusted house prices were up 8% from November 2019 to November 2020.

Tell me in the “Comments” what you think.

House Price Momentum

House prices continued to gain upward momentum in October. Nominal house prices increased more over the last 12 months compared to the previous 12 months in all cities covered by Case-Shiller.

For the U.S. as a whole, nominal house prices were up 9% from November 2019 to November 2020 but they only increased 3% from November 2018 to November 2019 so U.S. house prices have been gaining a lot of upward price momentum.

Home Prices

The Case-Shiller Home Price Index is now showing the rapid price rises we’ve been seeing in other more timely datasets.

Fastest Price Appreciation

Phoenix had 14% 12-month house (nominal) price appreciation!

Seattle had 13% and San Diego had 12% annual appreciation.

Slowest Price Appreciation (Is Fast!)

Las VegasDallas and Chicago all saw 7% 12-month house (nominal) price appreciation which was the slowest of the cities covered by Case-Shiller. A year earlier 7% would have been the fastest appreciating city!

Mortgage Rates Fell 2.2 Percentage Points Since November 2018

After 2 years of, more or less, constantly falling mortgage interest rates, house prices have an incredible amount of upward momentum going into 2021.

You can see from the interactive graph below that the 30-year fixed-rate mortgage rate hit 4.9% in November 2018. Now, it’s 2.7%. That’s the main reason the real estate market has gone crazy despite a recession and a pandemic.

Per dollar borrowed, your monthly principal and interest payment is now 23% less than in November 2018 so you can pay a LOT more for a house and people are.

I don’t know of any product that is more sensitive to interest rates than houses. In a way, it’s not a housing market, it’s an interest rate market.

Note. You can find interactive versions of these charts for all 20 Case-Shiller metros here.