Housing prices: might be hitting bottom … and, taking a long-term perspective, not as bad as they sound

Ken’s Take: Understandably, the focus on home prices tends to be on the recent month-to-month and year-to-year changes – since that’s what hits people’s net worth.  There appear to be some signs that some markets are bottoming out.

Usually lost in the shuffle is the fact that longer term, say back to 2000, housing prices in many (most?) markets have shown “healthy” annualized increases – even after adjusting for the market crash. For example, current housing prices in the DC market translate to an annualized inflation rate of about 6% since 2000.

Of course, that isn’t much consolation to folks who bought their houses during the boom period.

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Annualized since 2000

The Case Shiller indices have a base value of 100 in January 2000. So a current index value of 150 translates to a 50% appreciation rate since January 2000 for a typical home located within the metro market.

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Monthly and Annual Changes

Source: WSJ, Case-Shiller July 2009 update, July 29,2009

The S&P/Case-Shiller home-price indexes, a closely watched gauge of U.S. home prices, posted their first month-to-month increase in nearly three years in May, but annual weakness continued. (See charts below)

Las Vegas and Phoenix continued to posted the largest monthly and annual declines. Phoenix is down 55% from its peak in June 2006, while Las Vegas is off 53% from its highest level.

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Full article and interactive chart:
http://blogs.wsj.com/economics/2009/07/28/a-look-at-case-shiller-numbers-by-metro-area-july-2009-update/

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