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Home Price Boom Living on Borrowed Time – S&P/Case-Shiller

by devteam December 31st, 2013 | Share

The S&P/Case Shiller Home PricernIndex scored its greatest year over year gain in over seven years in Octoberrnthe company said today.  Both the 10-Cityrnand the 20-City Composites were up 13.6 percent compared to October 2012, thern17th straight month the two composites had increased compared to thernsame month the previous year.  It was thernlargest annual gain since February 2006.</p

On a monthly basis the two Compositesrngained 0.2 percent.  The company’s reportrnsaid that “Eighteen of the 20 metropolitan areas tracked by the survey postedrnlower monthly rates in October than in September.  After 19 months of gains San Francisco postedrna slightly negative return.”  Phoenixrnposted its 25th consecutive increase in October.  </p

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David M. Blitzer, Chairman of S&P’srnDow Jones Index Committee said that while each index continued to showrndouble-digit annual returns, “Monthly numbers show we are living on borrowedrntime and the boom is fading.”</p

He said that, despite those double-digitrnreturns for both Composites and thirteen of the cities therein, “Cities at therntop of the range (Las Vegas, San Diego and San Francisco) saw smaller annualrnincreases.  On the other hand, citiesrnthat have been relatively underperforming (Cleveland, New York and Washington)rnsaw their annual gains grow.  Miamirnshowed the most improvement.  Chicagornrecorded its highest annual rate (+10.9 percent) since December 1988.  Charlotte and Dallas posted annual increasesrnof 8.8 percent and 9.7 percent, their highest since the inception of theirrnindices in 1987 and 2000.”</p

Blitzer said that the key questionrnfacing housing is the direction the Federal Reserve will take in scaling back quantitativerneasing and how this will affect mortgage rates. rn”Other housing data paint a mixed picture suggesting that we may bernclose to the peak gains in prices. rnHowever, other economic data point to somewhat faster growth in the newrnyear.  Most forecasts for home pricesrnpoint to single digit growth in 2014.”</p

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Home prices for both the 10- and 20-Cityrnindices have recovered to mid-2004 levels. rnThe two Composites peaked in the summer of 2006 and are now down aboutrn20 percent from those peaks, more than half-way back from the post-recessionrnlows established in March 2012.  The 10-Cityrnhas gained 23.1 percent and the 20-City 23.7 percent since hitting those troughs.</p

Ten cities posted positive monthlyrnreturns in October, with Las Vegas and Miami having the greatest gains at 1.2rnpercent and 1.1 percent respectively. rnNine cities declined month over month (Atlanta, Boston, Chicago,rnCleveland, Dallas, Denver, San Francisco, Seattle, and Washington).  Charlotte and Miami were the only two withrnlarger gains from September to October than from August September while NewrnYork remained flat.  </p

All 20 cities had positive annual growth</band thirteen had higher October numbers than September.  Miami had the biggest jump, from an annualrnrate of 14.3 percent in September to 15.8 percent in October.  Las Vegas, Los Angeles, and San Francisco continuedrnto post annual gains over 20 percent.</p

The S&P/Case-Shiller Home PricernIndices track the price path of typical single-family homes in eachrnmetropolitan area covered. The indices have a base value of 100 in January 2000rnso a current value of 150 indicates prices in that market have increased by 50rnpercent since January 2000.  Detroit atrnpresent is the only city that is below that base with an index value of 94.79.

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.

About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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