Good News: Case-Shiller Study Shows Home Prices Passing 2006 Peak

The latest S&P CoreLogic/Case-Shiller Indices reported that October home prices rose 3.3% year-over-year, reaching a milestone 15%  above the pre-financial crisis peak reached July 2006.

Craig J. Lazzara, of the S&P Dow Jones Indices, said in a statement, “After a long period of decelerating price increases, the national, 10-city and 20-city composites all rose at a modestly faster rate in October compared to September. However, it is, of course, still too soon to say whether this marks an end to the deceleration or is merely a pause in the longer-term trend.

Heading into 2020, appreciation could temper, according to Lawrence Yun, chief economist at the National Association of REALTORS®, if builders expand inventory options. “Demand remains strong and supply is lacking,” says Yun. “Moreover, faster price appreciation in warmer Southern states reflect the ongoing migratory trend of people moving out of expensive regions of the country to more affordable parts. Southern cities should once again do better than most other markets.”

Additionally, although buyers face increasing prices, they also benefit from rising values, Bill Banfield, executive vice president of Capital Markets at Quicken Loans, points out.

The October, Year-Over-Year data for the 20 markets measured by S&P are:

Atlanta, Ga +4.2%, Boston, Mass. +3.4%, Charlotte, N.C. +4.8%, Chicago, Ill. +0.5%, Cleveland, Ohio +3.3%, Dallas, Texas +2.9%, Denver, Colo.+3.3%, Detroit, Mich. +3.1%, Las Vegas, Nev. +2.3%, Los Angeles, Calif. +2%, Miami, Fla. +3.3%, Minneapolis, Minn. +4.2%, New York, N.Y. +0.8%, Phoenix, Ariz.
+5.8%, Portland, Ore. +2.7%, San Diego, Calif. +2.9%, San Francisco, Calif. -0.4%, Seattle, Wash. +2.5%,
Tampa, Fla. +4.9%, Washington, D.C. +3%.

Although the stability was broad-based, New York was at the low end of the price increase year-over-year, and has had the lowest overall recovery rate (29%) from the 2008 crash of all the 20-city composites studied by Case-Shiller. This would suggest the New York composite, which includes NYC, Long Island, parts of New Jersey and Connecticut, has further to go and/or other factors like 2018 federal tax reforms, with significantly reduced certain state and local deductions may be holding down appreciation.  

Taking a microeconomic look at the North Fork Market, we have seen an increase in activity in recent months and believe our market reflects the pricing improvement. We also believe it will continue for the better part of 2020.  My advice: Sellers – call us and list early; Buyers - take advantage of the mild weather and low mortgage rates and shop early!

Source: RISMedia, Prices Now 15 Percent Higher Than Last Peak, December 31, 2019; Seeking Alpha, Updated S&P Case Shiller Home Price Data, Bespoke Investment Group, January. 8, 2020.