Carpe Diem

Case-Shiller home price data for October suggest that the US housing recovery is gaining strength

City October
Increase
Highest
Since
Atlanta 4.9% February 2006
Charlotte 4.1% October 2007
Dallas 4.6% January 2006
Denver 6.9% November 2001
Detroit 10.0% Highest ever
Las Vegas 8.4% March 2006
Miami 8.5% October 2006
Phoenix 21.7% May 2006
Portland 5.2% May 2007
Seattle 5.7% July 2007
Tampa 5.9% September 2006

The S&P/Case-Shiller Home Price Indices report for October was released this morning, here are some highlights:

1. “Annual rates of change in home prices are a better indicator of the performance of the housing market than the month-over-month changes because home prices tend to be lower in fall and winter than in spring and summer. Both the 10- and 20-City Composites and 19 of 20 cities recorded higher annual returns in October 2012 than in September. The 10-City Composite annual rate of +3.4% in October was lower than the 20-City Composite annual figure of +4.3% because the two weaker cities – Chicago and New York – have higher weights in the 10-City Composite.”

2. “Looking over this report, and considering other data on housing starts and sales, it is clear that the housing recovery is gathering strength. Higher year-over-year price gains plus strong performances in the southwest and California, regions that suffered during the housing bust, confirm that housing is now contributing to the economy. Last week’s final revision to third quarter GDP growth showed that housing represented 10% of the growth while accounting for less than 3% of GDP.”

3. The table above shows the 11 metro areas in the Case-Shiller Composite-20 Index where the annual gain in home prices in October was the highest year-over-year increase since before the recession started in December 2007.  Eight of the metro areas experienced higher annual returns in home prices in October of this year than in any month since October 2006 or before.  The 6.9% increase in Denver home prices in October was the highest annual return in more than a decade, and the 10% October increase in Detroit home prices was the highest on record for Case-Shiller data going back to 1991 for the Motor City. Most of the other nine metro areas in the Composite-20 index experienced artificially high annual returns in home prices during the summer of 2010 due to the first-time home buyer credit, but it’s noteworthy that the 11 cities above all had higher annual gains in October home prices this year than even during that period.

MP: It should be noted that the Case-Shiller index is actually a lagging indicator of U.S. home prices and the October indices are based on a three-month moving average of home prices from August-October, released with a two-month lag. More recent reports of home prices for home sold in November for: a) Case-Shiller metro areas like Miami (where the median price for condos sold in November surged by 31.7% and the median price for single-family homes increased 16%) and Minneapolis (where the median price in November increased by 17%), and b) entire states like Florida (where the median price increased 10.6% in November), and c) the national housing market (the November median sales price increased by 10.1%), all suggest that the Case-Shiller price indices will continue to show increases in U.S. home prices through the rest of this year and into next year as well.

30 thoughts on “Case-Shiller home price data for October suggest that the US housing recovery is gaining strength

  1. I don’t quite get this enthusiasm. If you can afford your payments, it doesn’t matter. If you want to sell and buy another one, that one will be cheaper, too, so it won’t matter. The only time it matters if you’re selling a house without the plan to replace it as when a relative dies.

    Otherwise, it’s just MORE PROPERTY taxes that get paid and higher commissions for all involved in the housing industry.

  2. Again, this is the most predictable of market actions, and Mr. Perry is jumping with glee. This list is practically a roll call of the cities that got hammered the hardest when housing crashed. The bigger the trough, the higher the percentage gain shown here.

    It should come as no surprise to anyone with a shred of market knowledge that these should show the greatest improvement afterwards. It’s following the script.

    New York prices were actually DOWN a tad, but the NY Metro area hadn’t suffered nearly as much.

  3. Dr. Perry: You don’t comment on the fact that the government’s footprint is on 90% of all loans out there, and that they are now proposing to guarantee more underwater loans through those insolvent twins, Freddie and Fannie. You have been bullish on housing and energy and manufacturing (any others?) for a couple years now. I know you’re not a big Obama supporter. However, if anyone dropped in to your site not knowing your love for Friedman and Hayek and Sowell, they might think that you believe Obama’s policies are responsible for the turnaround. I believe that’s extremely dangerous.
    How about a little perspective, Dr. Perry?

    • “Dr. Perry: You don’t comment on the fact that the government’s footprint is on 90% of all loans out there, and that they are now proposing to guarantee more underwater loans through those insolvent twins, Freddie and Fannie.”

      You’re another one who can’t tie two ends together. Just prattle on.

      • It would be good if you’re going to criticize a comment to explain what ends you’re talking about and then maybe give an example of how these ends should be tied. Please pull the head end out of the other end before you reply.

        • If you haven’t figured this out by now, sonny, there is really no point in starting. The poster apparently has absolutely no idea what Fannie and Freddie actually DO, so why bother?

          • Another typical and meaningless response from Maxie boy. If you’re going to disagree with someone at least tell them what you disagree with and why.

            jd has it right. Your head is up your ass.

            Try to compose an actual response to his comment.

          • “Another typical and meaningless response from Maxie boy. If you’re going to disagree with someone at least tell them what you disagree with and why.”

            Excuse me, jackass. But I’ll thank you to stop baiting me by pointing out I have made dozens of responses to this lie, with evidence from the Fed, from housing experts, and plenty of raw data from unbiased sources already.

            It’s all there if you care to look back on the earlier threads. I have even called out the chief promoters of this lie, AEI “fellows” Wallison and Pinto, but they don’t want to come out and play with me.

            They know what will happen to them if they dare to.

          • Excuse me, jackass. But I’ll thank you to stop baiting me by pointing out I have made dozens of responses to this lie, with evidence from the Fed, from housing experts, and plenty of raw data from unbiased sources already.

            It’s just possible jd hasn’t read all of your previous comments at this blog, and if so, he’s saved himself a lot of wasted time, but he DID ask you for an explanation, and you didn’t refer him to any previous drivel, but only claimed that you couldn’t be bothered.

            Ive even called out the chief promoters of this lie, AEI “fellows” Wallison and Pinto, but they don’t want to come out and play with me.

            They know what will happen to them if they dare to.

            LOL

            Oh Yes, you brute! I’m sure their cowering under their desks at this very minute. That’s funny.

            Actually I doubt that they know you exist, nor would they care if they did know.

          • “It’s just possible jd hasn’t read all of your previous comments at this blog, and if so, he’s saved himself a lot of wasted time, but he DID ask you for an explanation, and you didn’t refer him to any previous drivel, but only claimed that you couldn’t be bothered. ”

            F*ck off. He was on the same threads, and I described in detail how the whole wingnut narrative was not only wrong, it isn’t even POSSIBLE. I must have made over 40 posts on this, and I’m not doing it again, especially since this crowd isn’t moved by evidence.

            “LOL

            Oh Yes, you brute! I’m sure their cowering under their desks at this very minute. That’s funny.”

            Yeah, it IS funny. These two paid shills wouldn’t dare debate ANYONE directly on this, because they know a 27 year old loan officer at a local Chase branch knows they’re full of it.

            There are about a dozen very good books written about the genesis of the crisis- read any one of them, and see if you can find the AEI narrative about CRA/HUD?/Fannie/Freddie mentioned as a major contributor to the crisis.

          • I’m sure this comes as no surprise to anyone else on this site but I’ve never debated Max Planck about anything, anywhere–other than that whole quantum theory thing, which of course he stole from me. Oh wait, silly me, he’s not THAT Max Planck. He’s the Max Planck who, self-inflated beyond recognition by having his head end up his other end, has taken the name of a real genius, hoping that we might mistake him for someone other than a foul-mouthed gasbag. Wallison and Pinto have probably heard of Mark Perry, but Max Planck, the 27 year old bank teller from Oshkosk? Incredible. What’s more likely is that Max is on some kind of a watch list.

          • F*ck off. He was on the same threads, and I described in detail how the whole wingnut narrative was not only wrong, it isn’t even POSSIBLE.

            You know, Maxie, this may come as a huge shock to your oversized ego, but – get this – it’s possible that not everyone reads all of your your bullshit comments.

            I must have made over 40 posts on this, and I’m not doing it again, especially since this crowd isn’t moved by evidence.

            I’m sure it was at LEAST 40. And, seriously, thank you for not posting them again.

          • There are about a dozen very good books written about the genesis of the crisis- read any one of them, and see if you can find the AEI narrative about CRA/HUD?/Fannie/Freddie mentioned as a major contributor to the crisis.

            Is this one of them?

            I found this one to be extremely thorough and enlightening.

          • “I found this one to be extremely thorough and enlightening.”

            No doubt you did. Obscure, and biased to within an inch of it’s life.

            Try “The Big Short” by Michael Lewis, and “All the Devils Are Here” by Joe Nocera and Bethany MacLean for starters.

            The second one is, I believe, the best book on the crisis- it shows how all of the parts fit together.

          • No doubt you did. Obscure, and biased to within an inch of it’s life.

            Did you happen to reach that conclusion after reading it, or can you just tell such things by looking at the cover?

            Try “The Big Short” by Michael Lewis, and “All the Devils Are Here” by Joe Nocera and Bethany MacLean for starters.

            OK, thanks. I will.

            The second one is, I believe, the best book on the crisis- it shows how all of the parts fit together.

            Hm. The exact same impression I got from “Meltdown”.

          • “Did you happen to reach that conclusion after reading it, or can you just tell such things by looking at the cover?”

            Googled the author and checked it out on Amazon.

            Meh.

          • BTW, just to underscore this is from a review of the book:

            In brief, Wood’s argument is that “conservatives” do in fact share a significant portion of the blame for the present crisis. This is not because, as the cannard goes, they “deregulated” the economy. Indeed, regulatory spending during the Bush presidency went up 65% in real terms, a fact that I am amazed escaped any notice in this book.

            The “regulatory cost” has no correlation to what was actually deregulated. Frankly, when the Fed saw (and MUST have seen) when mortgage banks were writing SubPrime dogsh*t, they had the power to put the brakes on this. Same with lack of oversight of the NRSROs who were just rubber stamping this crap AAA and letting AIG “insure” it without collateral. What I’m saying is that “regulatory cost” isn’t a proof of anything, and that should be clear from the actions of a narcotized SEC during this period.

            This is not a religion with me. I look at the events as they unfolded, the decisions that were made, and then evaluate the consequences. It’s easy to do if you don’t regard your political religion as some necessary component of your personal identity, which is what a lot of people do.

            ” Nor is it because the Democrats somehow prevented them from providing enough oversight into Fanny Mae and Freddie Mac, two supposedly private companies which would never have existed were it not for their creation by government fiat. The real reason is because they allowed, and even collaborated in, a massive increase in currency inflation under Chairmans Greenspan and Bernacke and refused to heed warning signs about the consequent housing market bubble. Despite Republicans’ recent discovery that the Community Reinvestment Act has been used of late to offer loans to people who obviously were not qualified for them, the fact is that “conservatives” have been just as guilty about manipulating markets as liberals have for the last two decades and neither will own up to real problem: our Federal Reserve System does not limit crises like these. It creates them.”

            While it is certainly true that Greenspan created a monetary policy which fed into the crisis, the canard about the CRA is, once again, utterly baseless. It is not a fact, but a talisman. So it is hard for me to invest any credibility with this guy.

            Just let the data take you to the truth. That’s all it takes. Let the facts speak for themselves.

          • The “regulatory cost” has no correlation to what was actually deregulated.

            A more careful reading of that review, in particular the paragraph from which you quoted, might make it clear to you that you are disagreeing with the reviewer’s assessment of the causes of the meltdown, and not with the contents of the book.

            I know it doesn’t matter because you already know everything there is to know about …well, about everything (snicker), but you might be surprised by an actual reading of the book. It’s probably available at your local library.

          • “A more careful reading of that review, in particular the paragraph from which you quoted, might make it clear to you that you are disagreeing with the reviewer’s assessment of the causes of the meltdown, and not with the contents of the book.”

            I am presuming the reviewer got his assessment FROM the book.

            And yes, you’ll never learn what I forgot. Not because I’m innately smarter than anyone else, just better informed, and no political axe to grind. Again: just let the data lead you to the truth. Everything else is worthless BS.

          • I am presuming the reviewer got his assessment FROM the book.

            If you had read the book you wouldn’t make that mistake, but don’t worry about it Big Boy, your astonishing ignorance isn’t my problem.

            And yes, you’ll never learn what I forgot. Not because I’m innately smarter than anyone else, just better informed, and no political axe to grind. Again: just let the data lead you to the truth. Everything else is worthless BS.

            Max, you poor imbecile, you wouldn’t know the truth if it bit you on the ass.

          • “Max, you poor imbecile, you wouldn’t know the truth if it bit you on the ass.”

            The standard response of a witless dullard who can’t debate his way out of a paper bag.

  4. Detroit highest price ever. Congratulations Detroit!
    “Highest since” not inflation adjusted and NAR is a client of the Republican party.

    • mark-

      just because is is a 3 month moving average does not nesc make it lag what is going on. if things start to cool off, it will over report them. i’m not saying that is what is happening, but it is worth keeping in mind just how these tools work.

      also, it’s really apples and oranges to try to compare median prices to CS prices. median prices are being driven mostly by mix, not by appreciation of individual homes which is what CS measures.

      bob-

      those highest numbers are a measure of relative % gains, not absolute price.

      detroit is most decidedly NOT at all time highs.

      it’s just showing big % moves because it dropped so much.

      if a price drops from 100 to 1 then jumps to 2, that’s a 100% gain, but still not terribly meaningful if you owned it from 100.

      prices in detroit are still around 35% below the highs.

      the way mark presented that data is a little confusing on that.

      prices in denver are still 7% or so below the 2006 high.

      this may be the biggest % jump since 2001, but absolute prices are lower than 2006-7.

  5. Without rising income levels these price levels depend on low interest rates lowering monthly payments.

    When will we end the 1996 Clinton exemption from capital gains taxation for profits on home sales? This also props up prices by drawing in investment dollars.

    Shouldn’t we support policies that produce a market where purchasing a residence is motivation instead of an investment?

    • Dave Thomas

      When will we end the 1996 Clinton exemption from capital gains taxation for profits on home sales? This also props up prices by drawing in investment dollars.

      1. Do you remember the reason for that exemption in the first place?

      2. Why does it matter whose dollars are drawn into home sales?

      3. Why not eliminate capital gains taxes entirely to encourage savings and investment which are the real drivers of economic growth and wealth accumulation?

      Shouldn’t we support policies that produce a market where purchasing a residence is motivation instead of an investment?

      Why should “we” support policies at all for purposes of social engineering? Why not allow supply and demand in the housing market to determine prices?

  6. Note to Mark Perry from Josh Brown’s
    “What I learned in 2012″

    “Jonathan Miller (Matrix): a housing recovery really doesn’t need to be based on solid personal income growth and/or strong employment levels. More importantly I realized that pie is better than cake.”

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