Case-Shiller: Summer Surge Benefits Middle Tier Most

It’s time for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). Starting this month, we will be basing all of the charts in this series of posts on the seasonally-adjusted data provided by S&P. For the full source data behind this post, plus non-seasonally adjusted and tiered price data, hit the S&P/Case-Shiller website. For an explanation of how the Case-Shiller data is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – August data is released in October).

Here are the basic Case-Shiller stats for the DC area* as of August:

August 2009
Month to Month: Up 1.4% (raw)
Month to Month: Up 1.2% (seasonally adjusted)
Year to Year: Down 7.9%
Change from Peak: Down 30.3% in 38 months

Sixteen of the twenty metro areas tracked by Case-Shiller saw an increase in their respective seasonally-adjusted HPIs between July and August. Only Cleveland, Las Vegas, Charlotte, and Seattle marked seasonally-adjusted drops month-to-month.

Here’s a look at DC’s latest tiered data, back through 2000:

DC-Case-Shiller-Tiers_2009-08

Since March, the middle tier has increased nearly 5%, while the low and high tiers have only bumped up around 2%. This is a bit of a change from most other markets around the country, where the low tier has been spiking the most this summer.

Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves:

Case-Shiller-Redfin-Markets_2009-08

Here’s our peak decline chart, in which we line up the peak Case-Shiller HPI value for each of Redfin’s markets, so we can see how long each market has been declining, and how much it has dropped from the peak.

Case-Shiller-Peak-Declines_2009-08

Here’s the flip side of the peak decline chart—a graph of just this year, indexed to January = 100%:

Case-Shiller-2009-Bounce_2009-08

According to a Reuters story from earlier today, Robert Shiller has described the sudden spike seen in many markets this summer as potential “bubble territory.” I agree. As I have discussed on these pages in recent months, the sudden and simultaneous nature of this price uptick does not bear any marks of a return to fundamentals, but instead seems to be driven almost entirely by a mad dash for cheap loans (interest rates in the 5s) and free money ($8k tax credit).

I’m a little bit concerned that by interrupting the natural correction of the housing market, recent government intervention is setting us up for even more pain down the road. I hope I am wrong.

*[Case-Shiller defines Washington DC as the entire Washington-Arlington-Alexandria, DC-VA-MD-WV Metropolitan Statistical Area, which includes all of the District of Columbia and all or part of the following counties: Calvert MD, Charles MD, Frederick MD, Montgomery MD, Prince Georges MD, Alexandria City VA, Arlington VA, Clarke VA, Fairfax VA, Fairfax City VA, Falls Church City VA, Fauquier VA, Fredericksburg City VA, Loudoun VA, Manassas City VA, Manassas Park City VA, Prince William VA, Spotsylvania VA, Stafford VA, Warren VA, and Jefferson WV.]

  • http://www.manassashousedeals.com John

    Investors are reporting that prices have moved upward in the Manassas area throughout 2009 for properties that need significant repairs before hitting the retail market.