Real Estate's Seven-Year Rebound

Understanding value requires a long-term view.

Housing Wire's 5/28 article summarizes the latest data released by the Case-Schiller Home Price Index from S&P Dow Jones/CoreLogic. In March, nationwide prices rose 3.7% from the year before. This is less than the 4.0% year-over-year gain experienced in February, but still double the inflation rate. That's good news for real estate owners.  As the chart below shows, they have been getting good news at a slow, steady pace since 2012 -- after getting crushed from 2007 to 2009 and suffering slow, steady losses for two years after that. Real estate values did not return to 2007 levels until 2017.  

Case-Schiller provides a 20-city breakout that shows how location matters.  The high performers during the last year were Las Vegas (8.2% gain), Phoenix (6.1%) and Tampa (5.3%), causing some to speculate that buyers favor warmer climates. However, low appreciation in temperate San Diego and Los Angeles (1.3% for each) tells us that buyers look for more than warm weather.  Other factors may be taxes, high real estate prices relative to alternative cities, and a change in the local economy -- all possible topics for future discussions.

Image source:  S&P Dow Jones Indices LLC, S&P/Case-Shiller 20-City Composite Home Price Index [SPCS20RSA], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/SPCS20RSA, May 28, 2019.