I’m sure you have heard of the phrase, “No one knows what the future holds.” Certainly that phrase has a lot of truth to it when it comes to real estate prices. But, as investors, we have many tools to see what has happened in the recent past.
One of those tools is Standard & Poor’s Case–Shiller Composite-20 Home Price Index. It tracks the monthly change in housing prices for 20 U.S. metropolitan areas. The list of 20 consists of Atlanta, Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Detroit, Las Vegas, Los Angeles, Miami, Minneapolis, New York, Phoenix, Portland, San Diego, San Francisco, Seattle, Tampa, and Washington. (See http://en.wikipedia.org/wiki/SPCS20R for a list of the submarkets included in each of the 20 cities.)
The latest data shows that this 20 city composite was up 13.4% from the one year period ending in December 2013. Of these 20 cities, Cleveland prices grew the slowest at +4.5% and Las Vegas grew the fastest at +25.5%. But the group as a whole seemed to lose ground near the end of the year. Price changes of the 20 cities were -0.1% from October to November and -0.1% from November to December. In fact, most of last year’s growth seemed to come during the first six months of the year. You can see the full report at https://www.spice-indices.com/idpfiles/spice-assets/resources/public/documents/79678_cshomeprice-release-0225.pdf
Another interesting tool is the National Association of REALTORS® quarterly reports entitled Metropolitan Median Area Prices and Affordability. The latest report was released on February 11th and it shows the price changes from Q4 2012 to Q4 2013 for 173 different U.S. metropolitan markets. From this report, it seems that Elmira, NY had the worst change for the year at -11.6% and Atlanta-Sandy Springs-Marietta, GA had the best change for the year at +33.2%. The group of 173 improved by 10.1% for the year. This report too seems to show that the bulk of the increases from across the country seemed to come in the first half of the year. It seems most of the cities actually lost value during the last three months of the year. The full report can be found at http://www.realtor.org/topics/metropolitan-median-area-prices-and-affordability/data
Now, as a numbers-geek, I know that two different real estate investors (or media outlets for that matter) can look at the same data and come up with completely different interpretations of the results. So, you must decide for yourself what you believe regarding what has happened so far … and more importantly … what will happen next with real estate. So, take a look at the data and then share your thoughts on the future of housing prices by simply clicking on “Comments” near the top of this post. Only time will tell if your predictions are right.