VoiceofSanDiego.org

Articles that I have written for VoiceofSanDiego.org, a local news publication that provides continuing coverage of San Diego housing and economic issues.

Case-Shiller Index: Cheaper Homes Still Rebounding Fastest

Submitted by Rich Toscano on March 6, 2014 - 2:00pm
The Case-Shiller home price index is not as timely as the monthly median price data, but has a couple advantages over the latter. First, because the CS index is calculated by comparing repeat sales of the same homes, it gives a more accurate read on actual home price changes (more than you ever wanted to know on this topic can be found here). Second, the Case-Shiller data additionally breaks down price changes for low-, mid-, and high-priced homes, which allows us to observe what prices are doing in each of those segments of the housing market.

So, we know that 2013's price surge was most beneficial to lower-priced homes, which were up 22 percent for the year. Mid-priced homes were up 19 percent and the most expensive tier was up "only" 16 percent. The overall index was up 18 percent for the year. (Note: the price tiers are calculated simply by separating the home sales into thirds: the high-priced tier is comprised of the most expensive one-third of homes sold during the measurement period, and so on.)

This is the same pattern we've seen since the 2009 home price trough: from their respective lows through the end of 2013, the cheapest one-third of homes were up 51 percent, versus 30 percent for the middle tier, 23 percent for the expensive one, and 34 percent for the overall index. (Some historical context for those changes is found below). Most of that price increase -- and in the case of the middle and high tiers, all of it -- has taken place since 2012.

This graph of the different tiers since the 2009 price low shows that the relative strength of the cheaper homes continued right through to the end of the year:



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The Year in Home Prices, According to Case-Shiller

Submitted by Rich Toscano on March 5, 2013 - 5:47pm
Let's have a look at how the year 2012 treated house prices, as measured by the Case-Shiller index.

This home price indicator lags by a couple months, but it offers a couple advantages. First, it uses repeat sales of the same homes, so it is more accurate than simply looking at a median price, which could be distorted by a change in the quality of homes sold.

Second, it breaks the sold homes into three price tiers, which allows us to separately analyze price changes for low-, medium- and high-priced homes. (The tier cutoffs are determined by simply splitting the sold homes into three equal-sized groups — the most expensive one-third of homes sold goes into the high-priced tier, etc.).

Here is the Case-Shiller index, for the three tiers as well as the combined index in black, starting at the early-2009 price trough:



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Case-Shiller: Prices Up But Still Near Bottom

Submitted by Rich Toscano on October 7, 2012 - 2:39pm
The Case-Shiller home price index is the most accurate measure of aggregate prices, and as such it is great for long-term comparisons.  It also provides a useful distinction by breaking the price data into three tiers of expensiveness.

The downside is that numbers are very "stale." The recent September release, for example, only has price data through July, and that figure actually is calculated from sales that took place as early as May.

Because I haven't done much in the way of long-term comparisons, and because there was little of interest in the tiered data (all three price tiers have been acting very similar to one another), I haven't done a CS update in a while.  Let's check in on the most recent numbers.

The recent increase in prices that I've been occasionally documenting is clear in this chart of prices since the post-crash (aggregate) bottom in 2009.  For the year-to-date throguh July, the aggregate index is up a bit over 5 percent, and the low, mid, and high price tiers are all up similar amounts:



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Case-Shiller Index Starts to Register Home Price Bounce

Submitted by Rich Toscano on June 27, 2012 - 6:01pm
The recent increase in San Diego home prices has begun to show up in the (always lagging) Case-Shiller index. 

Between January, the month for which I last updated the C-S data, and April, the aggregate San Diego home price index has risen by 2.0 percent.  This increase was enjoyed entirely by the high- and mid-priced tiers, up 2.4 percent and 2.5 percent respectively.  The low tier actually declined by .7 percent, although that entire decline took place in February and the low tier has risen since then.



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Why Bubbles Are Bad

Submitted by Rich Toscano on April 1, 2012 - 2:15pm
I've often discussed how the three industries that I refer to as the "housing bubble beneficiary sectors" took the brunt of the recessionary job losses.  In this post, I have updated some graphs showing the enormous degree to which this is the case.

The bubble beneficiary sectors, so named because they grew like weeds as a result of the housing boom, are: construction, finance (which includes real estate transactions), and retail (not directly related to housing like the other two, but a bubble beneficiary nonetheless as a result of vigorous home equity-financed consumer spending).  In the graphs below, I have grouped these three sectors together as the "Housing Bubble Sectors" and charted the change in their size alongside that of the non-bubble private sector industries and government.

I took these graphs all the way back to the beginning of 2007 because the bubble sectors started to deflate alongside the housing bubble even before the recession officially began in December of that year.  In order to avoid seasonality problems, I started and ended the graphs on the same month (January 2007 through January 2012).

This first graph shows the number of jobs lost in each of these three categories:



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Employment Backed Off in Early 2012

Submitted by Rich Toscano on March 30, 2012 - 6:10pm
According to the Employment Development Department latest estimates, seasonally-adjusted employment in San Diego is estimated to have dropped between December and January, and then to have rebounded somewhat February:



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Case-Shiller Index Down in January

Submitted by Rich Toscano on March 27, 2012 - 6:13pm
The Case-Shiller index of San Diego home prices declined once again in January, falling by 1.6 percent for the high-priced tier, 1.0 percent for the mid-priced tier, and .2 percent for the low-priced tier.  (The tiers represent, respectively, the top, middle, and bottom one-third of homes sold by price).  The overall San Diego index fell by 1.1 percent.

As the following graph shows that the middle and high tiers are now below the post-bubble low points they hit in early 2009.  (I guess that means I should remove the word "2009 trough" from these graphs).



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Case-Shiller Index Ended Down for 2011

Submitted by Rich Toscano on February 28, 2012 - 7:15pm
The Case-Shiller index of San Diego home prices declined across the board in December:



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A Lost Decade-Plus for San Diego Home Prices

Submitted by Rich Toscano on February 5, 2012 - 12:14pm
The latest Case-Shiller data, released last week, provided a not-very-clear picture of home price trends.

The overall index fell by .9 percent between October and November.  There was some serious divergence amongst price tiers, though: the high tier fell by a mild .4 percent, the middle tier was whacked for 1.7 percent, and the low tier was actually up by .4 percent.



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Ending a Good Year for San Diego Jobs

Submitted by Rich Toscano on January 22, 2012 - 6:09pm
The year 2011 was a positive one for San Diego employment.  The number of local jobs rose in absolute terms...



...but the more important seasonally-adjusted data shows that employment rose even when accounting for holiday hiring....

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Case-Shiller Home Price Index Down Slightly in October

Submitted by Rich Toscano on January 4, 2012 - 2:30pm
The October Case-Shiller data was released last week.  It showed a mild decline in home prices, with the low and middle tiers down .6 percent from the prior month, the high tier down .2 percent, and the overall index also down .6 percent.



However, the seasonally-adjusted indices, which aim to back out the effects of seasonal influences on prices, were more mixed...

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San Diego's Job Recovery Continued in November

Submitted by Rich Toscano on December 18, 2011 - 7:50pm
San Diego employment was up in November, per the Employment Development Department's latest estimates:



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Inflation-Adjusted Home Prices Hit New Post-Bubble Low

Submitted by Rich Toscano on December 3, 2011 - 6:15pm
The Case-Shiller index of San Diego home prices declined in September.  For the month, the low-priced tier dropped 1.6 percent, the middle tier 1.1 percent, and the high tier .1 percent.  The aggregate index fell by .8 percent.



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Job Recovery Strengthened in October

Submitted by Rich Toscano on November 20, 2011 - 2:12pm
We have entered the time of year when employment growth traditionally picks up the pace.  Per the latest estimates from the Employment Development Department, that's exactly what happened last month:



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Case-Shiller Index Dropped in August

Submitted by Rich Toscano on October 27, 2011 - 5:07pm
The Case-Shiller index of San Diego home prices dropped for all three price tiers in August.  Prices by this measure declined .6 percent for the low-priced tier, .5 percent for the middle tier, .3 percent for the high tier, and .2 percent for the aggregate index.



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