Get Blog Updates on your iGoogle homepage:
| Drilling Into “National” Home Price Stories |
| Written by Jonathan Smoke | |
| 05.30.2007 | |
|
Discuss this article on the forums. (0 posts) While continuing the theme from yesterday’s post, today I also wanted to acknowledge the newest set of national pricing data. The initial S&P/Case Shiller price indices for March were released yesterday. As covered by Paper Money, the March 2007 S&P/Case-Shiller index, “…continued to show weakness for the nation’s housing markets with thirteen of the twenty metro areas tracked reporting significant declines.
Topping the list of decliners on a year-over-year basis was Detroit at -8.838%, San Diego at -5.97%, Boston at -4.86%, and Washington DC at -4.78%. Additionally, both of the broad composite indices showed accelerated declines slumping -1.88% for the 10 city national index and -1.36% for the 20 city national index resulting in the first negative appreciation on an annual basis since the 1990-1991 [time period].” I am not contesting that prices are down in these markets, what I do want to point out is the point I made yesterday: local markets are responsible for the majority of influence on individual home prices so fixating on national measures can be misleading.  We all will be watching the S&P/Case-Shiller Indices for months and years to come since the family of indices is the basis for housing futures traded on the Chicago Mercantile Exchange. But, if you don’t live in one of these markets, they don’t particularly inform you of pricing and pricing trends in your local market.The original 10 city composite is comprised of Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco and Washington, DC. That group of cities had pricing down 1.9% on a year-over-year basis, with only Chicago and Miami up while the rest of the ten cities were down. I think it’s amazing that prices were up in Chicago and Miami, but I haven’t seen that headline just yet. The remaining ten cities in the “broader” twenty-city composite are Atlanta, Cleveland, Charlotte, Dallas, Detroit, Minneapolis, Phoenix, Portland, Seattle and Tampa. Half were up and half were down. Want to guess which markets were up? How about the ones that aren’t in an economic decline and missed the rapid price appreciation party: Atlanta, Charlotte, Dallas, Portland and Seattle. Collectively the cities tracked by these “broad” composites are conveniently very representative of bubble markets and areas most impacted by recent losses in the manufacturing sector. That’s no criticism of Case-Shiller, as it is these areas where home prices are likely most volatile, so what better markets to base the initial housing futures? The quarterly national index that tracks home prices in the nine U.S. census divisions was down 1.4% in the first quarter of 07 over the same quarter last year, but since the exact composite of this index is not revealed, it's tough to say just how reflective of local housing markets this index is. Instead of any of the individual indices or either of the composites, one could do better with a random sample of the 361 metropolitan statistical areas in the 50 states for a picture of the national housing situation. Or better yet, stick with paying attention to your local market more than these national figures. 
We're always looking for feedback from our readers.
|
| < Prev | Next > |
|---|
