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What the Case Shiller Report is Actually Telling Us


Breakthrough in investigation processCase Shiller released their latest Home Price Index yesterday. The headlines that followed were true but, in our opinion, a little misleading. Here are some of the highlights of the report that have dominated major media coverage:

  • Home prices rose 5.5% in the 12 months ending in November 2012 (the latest data available).
  • In the 12 months ended in November, prices rose in 19 of 20 cities.
  • Housing is clearly recovering. Prices are rising as are both new and existing home sales.

Great news for the housing industry. Realize however that all the highlights mentioned above refer to year-over-year comparisons.

What is NOT Being Reported

There is another finding in the report that hasn’t garnered many headlines – month-over-month prices are softening.

There is no doubt that prices are up over the same time period last year. However, home price movement is seasonal. During the winter months for each of the last three years, prices have softened. That is taking place again this winter. As the report states:

“Winter is usually a weak period for housing which explains why we now see about half the cities with falling month-to-month prices compared to 20 out of 20 seeing rising prices last summer.”

This does not mean the housing recovery is slowing. It just means that home values are following their historic trend. As explained in the report:

“The better annual (year-over-year) price changes also point to seasonal weakness rather than a reversal in the housing market.”

If you are thinking of selling, you really need to know what will happen to home values in the short term. Prices, based on history, will soften over the next several months in many markets. Therefore, if your plan is to move by next summer, waiting for higher prices before putting your house on the market may not make sense.

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4 Responses to “What the Case Shiller Report is Actually Telling Us”

  1. JoeLoomer January 30, 2013 at 10:28 am # Reply

    The best measure of increasing VALUE (not price) is the median price per square foot. When people are paying more for less space, values are coming back. Until then, they’re just getting a better deal on a bigger home.

    Navy Chief, Navy Pride

  2. John Ryan January 30, 2013 at 2:42 pm # Reply

    I think we are seeing the local market reemerge. It really depends where you are and what you are next to. My township is seeing great increases while the next township sees languishing inventory. Go figure

  3. Harj Gill January 30, 2013 at 2:51 pm # Reply

    @twitter-71924902:disqus point well made in that real estate is geo specific. All the more reason to be the situational expert so you can help clients understand what’s “really” happening in the broader AND local market vs. the Doom and Gloom see-saw headlines.

  4. Richard Kadesch February 7, 2013 at 9:43 am # Reply

    There are markets within markets and the broad national indexes do not take that into account. In my area, the prices of less expensive real estate have been improvding for some time while luxury real estate prices continue soft.

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