Case-Shiller: Bay Area Home Prices Continue Spring Movement Up

It’s time for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). For the full source data behind this post, plus 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. – May data is released in July).

Before we dig into the data, I’d like to make a brief mention of an excellent post over at the economics website Calculated Risk: A Few Comments on Housing Reports. Quoting from his post:

…the Case-Shiller report today really bothered me. To be more accurate, the reporting on the Case-Shiller report bothers me. As I mentioned earlier today, there is a strong seasonal component to house prices, and although the seasonally adjusted Case-Shiller index was down (Case-Shiller was reported as up by the media) – I don’t think the seasonal factor accurately captures the recent swings in the NSA data.

Keep in mind that the Case-Shiller data that most of the media (including this blog) are reporting on is usually the raw index data. As CR mentioned, the housing market is a very seasonal beast, so it’s difficult to draw any meaningful conclusions from month-to-month changes, unless they are far outside the norm for that time of year. This is why we consistently report the year-to-year change in our summary.

Now that we’ve got that out of the way, here are the basic Case-Shiller stats for the Bay Area* as of May:

May 2009
Month to Month: Up 1.4% (raw)
Month to Month Up 0.7% (seasonally adjusted)
Year to Year: Down 26.1%
Change from Peak: Down 45.0% in 36 months

The following chart shows the Bay Area HPI scaled such that the May 2006 peak is 100% on the y-axis. Data on the x-axis is scaled to display the last time (pre-peak) the Bay Area HPI was at or lower than it was in the latest data (August 2000).

(All of the charts below are based on the non-seasonally-adjusted Case-Shiller HPI data.)

We definitely appear to be seeing something in the May data that is a little stronger than the spring non-bounces that have hit the Bay Area the last two years. Of course, the current uptick could still be largely seasonal…

Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves, so you can compare San Francisco’s performance to other areas across the country:

And here’s our final 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.

It’s also worth keeping in mind that in addition to being from a usually-strong time of year, these numbers represent home sales that closed during the frenzy of interest rates in the fours and the debut of the $8,000 first-time homebuyer tax credit. In my opinion, we won’t really know if home price declines are mostly over until we see the data from October / November. And that advice is worth exactly what you paid for it ;^)

*[Case-Shiller defines the San Francisco Bay Area as the San Francisco-Oakland-Fremont, CA Metropolitan Statistical Area, which includes all of the following counties: Alameda, Contra Costa, Marin, San Francisco, and San Mateo.]