Even in Miami and Tampa, prices down for 5th month in a row.
By Wolf Richter for WOLF STREET.
Just for a foretaste, Housing Bubble 2 in Seattle:
Housing Bubble 2 is deflating relentlessly, not under the pressure of an unemployment crisis – far from it: the labor market is still historically tight with the highest pay increases in four decades, and an increase in unemployment would be the next shoe to drop on the housing market – but because mortgage rates have reverted to the normal levels of 6% to 7% that existed before the money-printing era started in 2008. And home prices that exploded over the past few years, fueled by mortgage rates of 3% and lower, don’t make sense anymore – and never made sense to begin with.
Today we got the S&P CoreLogic Case-Shiller Home Price Index for “December.” The time span here: a three-month moving average of home sales that were entered into public records in October, November, and December, reflecting deals made largely in September through November.
On a month-to-month basis, today’s Case-Shiller Index for single-family house prices dropped in all 20 metros that it covers. The biggest month-to-month drops, those dropping at least 1.0%, occurred in:
Phoenix: -1.9% (second month in a row! The babe is moving fast)
Portland: -1.9%
Las Vegas: -1.8%
San Francisco Bay Area: -1.8%
Seattle: -1.8%
Denver: -1.3%
San Diego: -1.3%
Chicago: -1.2%
Minneapolis: -1.2%
Dallas: -1.1%
Detroit: -1.1%
Charlotte: -1.0%
From their respective peaks, which ranged from May to July 2022, house prices dropped the most in these metros:
San Francisco Bay Area: -16.0%
Seattle: -15.1%
San Diego: -11.1%
Phoenix: -9.4%
Denver: -7.5%
Las Vegas: -8.8%
Los Angeles: -8.1%
Portland: -7.9%
Dallas: -7.6%
The Case-Shiller Index uses the “sales pairs” method, comparing sales in the current month to when the same houses sold previously. The price changes are weighted based on how long ago the prior sale occurred, and adjustments are made for home improvements and other factors (methodology). This “sales pairs” method makes the Case-Shiller index a more reliable indicator than median price indices, but it lags months behind.
Median-price indices reflect the price in the middle of all homes that sold that month, and can therefore be skewed by a change in the mix of homes that are sold, which can be an issue when a market undergoes sudden and dramatic changes, such as in 2022. But median price indices are lot more current.
The San Francisco Bay Area is the leader here. The Case-Shiller index for single-family houses has now dropped 16.0% from the peak in May. On a year-over-year basis, the index is down 4.2%.
By comparison, the median price index by the California Association of Realtors for the San Francisco Bay Area – median prices being a lot more current but less reliable – plunged 35% in January from the crazy peak in April.
The Case-Shiller index for the San Francisco Bay Area plunged faster in the seven months since the peak in May (-63 points) than it had spiked in the seven months up through May (+53 points).
The index for “San Francisco” covers five counties of the nine-county San Francisco Bay Area: San Francisco, part of Silicon Valley, part of the East Bay, and part of the North Bay.
Month over month: -1.8%.
From the peak in May: -16.0%.
Year over year: -4.2%.
Lowest since May 2021.
In the Seattle metro. The chart shown at the intro as foretaste:
Month over month: -1.8%.
From the peak in May: -15.1%.
Year over year: -1.8%.
Lowest since October 2021.
San Diego metro:
Month over month: -1.3%.
From the peak in May: -11.1%.
Year over year: +1.6%.
Lowest since December 2021.
Phoenix metro:
Month over month: -1.9%.
From the peak in June: -9.4%.
Year over year: +2.9%
Lowest since January 2022.
Las Vegas metro:
Month over month: -1.8%.
From the peak in July: -8.8%.
Year over year: +3.6%
Denver metro:
Month over month: -1.3%.
From the peak in May: -8.7%.
Year over year: +3.5%.
Lowest since January 2022.
Los Angeles metro:
Month over month: -0.8%.
From the peak in May: -8.1%.
Year over year: +2.7%.
Lowest since January 2022.
Portland metro:
Month over month: -1.9%.
From the peak in May: -7.9%.
Year over year: +1.1%.
Dallas metro:
Month over month: -1.1%.
From the peak in June: -7.6%.
Year over year: +7.9%
Boston metro:
Month over month: -0.9%.
From the peak in June: -5.5%.
Year over year: +5.2%
Washington D.C. metro:
Month over month: -0.4%.
From the peak in June: -4.3%.
Year over year: +4.3%
Tampa metro:
Month over month: -0.9%.
From peak in July: -4.0%
Year over year: +13.9%
Miami metro:
Month over month: -0.3%.
From peak in July: -2.6%
Year over year: +15.9%
In the New York metro:
Month over month: -0.2%.
From peak in July: -1.8%
Year over year: +6.6%
For the Miami metro in December, the Case-Shiller Index had a value of 399 points. All Case-Shiller indices were set at 100 for the year 2000. This means that Miami house prices are still up 299% since 2000, despite the recent dip. This makes Miami the #1 most Splendid Housing Bubble in terms of price increases since 2000 in the Case-Shiller Index, having surpassed the prior #1s, at different times, Los Angeles and San Diego, in 2022 because their prices dropped faster than prices in Miami.
The New York metro, with an index value of 271 – house price inflation since 2000 of 172% – forms the taillight of this list of the Most Splendid Housing Bubbles.
The remaining six housing markets in the Case Shiller index haven’t risen nearly as much and don’t qualify for this list. All of them have been seeing prices declines over the past few months. In “December” month-to-month: Chicago (-1.2%), Charlotte (-1.0%), Minneapolis (-1.2%), Atlanta (-0.7), Detroit (-1.1%), and Cleveland (-0.8%).
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