THE BASIS POINT

All 20 ‘cities’ in Case Shiller home price measure just fell. What does this mean for you?

 
 

Today, one of Wall Street’s preferred home price measures showed home prices dropped in all 20 cities it measures. S&P CoreLogic Case Shiller home prices fell 0.8% nationally, and the image above shows how the 20 key cities — actually major metro areas — measured all fell. Below are some key notes about this report, including it’s backward looking nature.

– For the image above, you can see both December and November prices dropped in all cities.*

– Wait, it’s almost March, what gives? The S&P CoreLogic Case Shiller report is highly credible, but it is on a 3-4 month lag.

– Why? Because it takes 30-60 days to close home purchase deals, then they hit public record, and that’s what Case Shiller mines for prices.

– So December’s closed sales are largely reflecting market activity from October and November.

– Also, again, these aren’t cities as much as broad regional areas.

– Example: “San Francisco” — where prices are down the past 2 months and also down 4.4% for the year through Dec — isn’t just the city. It’s a broad 5-county Bay Area region (see methodology link below).

– As such, you can’t price a home using data like this.

– Homebuyers using Case Shiller to price a home is like investors using stock index or even sector data to price a stock.

– It’s one input, but local analysis is more important for property selection and offer price strategy.

– To make responsible home buying (and selling) decisions, you need current and truly local price data.

– You do this by looking at home prices at the neighborhood, street, and individual property level with a realtor.

– Realtors help buyers do this for free because sellers, not buyers, pay realtors in most markets).

Please comment or reach out with any questions.

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Reference:

REPORT: Case Shiller Home Prices Declined Again in Dec

Inflation fuels mortgage rate spike from 6% to 7% in Feb. What can you afford?

Feb 2023 prices on newly built homes down 14% to $427,500. Can you afford this?

S&P CoreLogic Case Shiller home price methodology

Case Shiller home prices are now owned by CoreLogic, a major housing data player. They’re now making mortgage software moves too, as detailed here: Housing data giant CoreLogic buys mortgage fintech Roostify: what’s in it for lenders & consumers?

– * NSA and SA mean not seasonally adjusted and seasonally adjusted. The media mostly reports on NSA, but you’ll note both are down in all cities.

 

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