by calculated risk May 3, 2024 12:24:00 PM
In today’s ‘Calculated Risk Real Estate’ newsletter: Inflation-adjusted house prices are 2.4% below peak.
excerpt:
More than 17 years have passed since the peak of the bubble.inside February Case-Shiller Home Price Index The seasonally adjusted national index (SA) released on Tuesday was reported to be 71% above the 2006 bubble peak. But in reality, the National Index (SA) is about 10% above the bubble peak (and historically, real house prices have been on the rise). The Composite Stock Index 20 is 1% above the bubble peak in real terms.
Usually people graph the nominal price of a home, but it’s also important to check the actual price. For example, if your home cost $300,000 in January 2010, the inflation-adjusted price would be $429,000 today (a 43% increase). That’s why his second graph below is important. This shows the “real” price.
The third graph shows the price to rent ratio and the fourth graph shows the affordability index. The final graph shows the five-year real returns based on the Case-Shiller National Index.
…The second graph shows the same two indices in real terms (adjusted for inflation using CPI).
In real terms (using CPI), the national index is 2.4% below its recent peak., the Composite 20 Index is 3.1% below its recent peak in 2022. Both indexes were essentially flat in February in real terms.
In real terms, house prices nationwide are 10.2% above bubble peak levels. Although real housing prices are on the rise and more than 17 years have passed since their last peak, real prices remain at historically high levels.
