The S&P CoreLogic Case-Shiller National Home Price Index for October, released this morning, jumped 6.2% year-over-year (not-seasonally-adjusted), up from 6.1% in September. The index has now surpassed by 6.0% the crazy peak in July 2006 of Housing Bubble 1 and is up 46% from the trough of Housing Bust 1:
Real estate prices are subject to local dynamics but are impacted by national and even global factors, such as the consequences of monetary policies, particularly in places where this liquidity washes ashore. This creates local housing bubbles. And they operate each on their schedules. When enough of these local bubbles occur simultaneously, it becomes a national housing bubble as depicted by the chart above.
The Case-Shiller Index is based on a rolling-three month average; today’s release was for August, September, and October data. Instead of median prices, the index uses “home price sales pairs.” For instance, it takes sales data from a house that sold in 2011 and then again in 2017, incorporates other factors, and uses algorithms to adjust the price movement into an index data point. The index was set at 100 for January 2000. An index value of 200 means prices as figured by the algorithm have doubled since then.
Here are the standouts among the housing bubbles in major metro areas:
Boston
The index for the Boston metro area ticked down on a monthly basis, the first decline after 22 months in a row of increases. It’s still up 6.9% year-over-year, a slightly slower pace then the 7.2% year-over-year surge in the prior month. During Housing Bubble 1, it soared 82% from January 2000 to October 2005, before the plunge set in. Now, after six years of relentless price increases, the index exceeds the peak of Housing Bubble 1 by 12.7%.
Seattle
The Case-Shiller home price index for the Seattle metro declined again by a tad on a month-to-month basis — first back-to-back declines since the end of 2014! However, the index is not seasonally adjusted, and a slight downturn this time of the year was not unusual before 2015. So this may be a sign that the housing market in Seattle is returning to some seasonal patterns, rather than just spiking no matter what. The index is up a breath-taking 12.7% year-over-year, 20% from the peak of Housing Bubble 1 (July 2007), and 79% from the trough of Housing Bust 1 in February 2011.
Denver
The index for the Denver metro rose again on a monthly basis, the 24th monthly increase in a row. It is up 6.6% year-over-year and has surged 44% above the prior peak in the summer of 2006. Note that Housing Bubble 1 and subsequently Housing Bust 1 mostly spared Denver. But in 2012, Housing Bubble 2 erupted with a vengeance.
See the rest of the story at Business Insider
