I just updated the Case-Shiller charts.
“’Home prices continue to climb at a 4% to 5% annual rate across the country,’” says David M. Blitzer, Managing Director and Chairman of the Index Committee for S&P Dow Jones Indices.”
Of course, the variation between cities is tremendous. San Francisco and Denver home values, for example, are both up 10.7% from a year earlier.
San Francisco, however, lost most of its upward price momentum which is typical for the time of year. Denver, on the other hand, still had a lot of upward momentum despite the time of year.
New York, Chicago and Washington D.C. had the least amount of appreciation August-to-August (less than 2% appreciation) among the 20 metro areas covered by the Case-Shiller Home Price Index.
The Case-Shiller data is now updated through August. You can see my updated Case-Shiller charts here.
2013 Was Almost As Hot As 2005-2006
Here’s a scary little factoid in their press release.
“After removing the effect of inflation, prices rose almost as quickly in 2013 as they did in 2005-2006, the peak of the boom.”
I knew 2012 and 2013 were hot but that’s kind of scary hot.
Home Prices Are Not Directly Included in CPI
The Consumer Price Index (CPI) does NOT incorporate home prices directly. The CPI uses the estimated “rental equivalent” to estimate changes in housing prices. Rents, however, are far more stable than home prices as the graph below shows.
That means homeowners who buy during a rapidly rising real estate market face a lot of housing cost “inflation” that isn’t incorporated into the CPI inflation rate. That means the Consumer Price Index underestimates inflation during times of rapidly rising home prices.
I bet recent home buyers in San Francisco and Denver would agree.
Here’s a chart I found on the web that shows the relationship well.
4 Responses to HOT = San Francisco & Denver. NOT = New York, Chicago & D.C.
The San Francisco Bay Area is definitely still a sellers market (in the cities and suburbs) even now in November ’15. This week I’ve seen three offers on a home that’s not even listed!
Oh yeah. One question I was asked this week by a potential buyer in SF – ‘what’s the best way to contact someone in your building to see if they might be interested in selling?’ My answer: put yourself in their shoes. So don’t confront them directly in the hallway or anything like that. Try an email or better yet a handwritten letter. They probably receive inquiries from time-to-time and mostly ignore them. So try to stand out in the politest way possible, and write the kind of letter that you’d like to receive yourself.
By the way, in the SF market this summer we saw streams of multiple offers over asking, all cash, contingencies waived upfront, buyer pays all closing costs. And people young and old keep saying this one word that has somehow gripped our generation in the funniest way, “crazy”.
Some buildings have bulletin boards.
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