The U.S. Housing Recovery: Still Uneven

Parsing the latest numbers from the S&P/Case-Shiller Home Price Indices.

Image
Andy Dean Photography / Shutterstock.com

The U.S. housing market continues to recover, based on new numbers [PDF] from the flawed but still influential S&P/Case-Shiller Home Price Indices. But at the metro-area level, the recovery is decidedly uneven. 

Case-Shiller uses two measures: the 10-city and 20-city composites of 20 major U.S. metros. In August versus July 2012, average house prices increased by 0.9 percent for both composites, according to this morning's fresh report.

Let's see what we can parse from this summer's changes for these 20 major metros, via the report itself:

First of all, all but one metro (Seattle) saw average home prices rise from July to August, which is good news. Detroit had the highest increase (2.3 percent), followed by Phoenix and Atlanta (both 1.8 percent), and Las Vegas (1.6 percent).

But if we look at the level numbers, which show the amount of cumulative increase since 2000, those same places actually have very low values. Detroit, Atlanta, and Las Vegas are all below 100, since they still remain below their market's 2000 levels. And when we look at the year-over-year figures, several metros are showing declines: Atlanta, Chicago, and New York.

Note also that while some metros are still below their 2000 levels, other metros like New York, Washington, D.C., and Los Angeles are considerably above their 2000 levels.

Jed Kolko, the chief economist and head of analytics at real-estate website Trulia (as well as an occasional contributor to Atlantic Cities) weighed in on the report via email:

The year-over-year gain is BETTER than it sounds. The Case-Shiller headline numbers – the 20-city composite – has been understating year-over-year national price growth. The most recent national price report – which Case-Shiller publishes only quarterly – showed a year-over-year increase of 1.2% nationally, vs 0.5% in the 20-city composite and 0.1% in the 10-city composite (June 2012 data, published late August). The 10-city and 20-city composite indexes are heavily weighted toward New York and Los Angeles, and New York had the second-biggest price decline year-over-year after Atlanta, which drags down the composite indexes relative to the national index. That means year-over-year national price growth in August could be between a half and full percentage point higher than the 20-city composite year-over-year growth of 2.0% reported today.

The month-over-month gain is WORSE than it sounds... Almost half of the 0.9% month-over-month gain is due to seasonal factors, which are typically most favorable in the August and September releases. Seasonally adjusted, prices rose 0.5% month-over-month for the 20-city composite.

Atlanta is the big turnaround metro. In the past three months (August versus May), Atlanta prices rose 5.5%, highest among the 20 metros, followed by Detroit (4.6%) and Phoenix (4.4%) – even though Atlanta has the biggest year-over-year decline.

Kolko also related the numbers to the upcoming election, using a combination of the index's data and Trulia's own numbers:

Prices on Election Day will be almost the same as when Obama took office. Case-Shiller prices are down 3.3% between January 2009 and August 2012 (seasonally adjusted) but should see a 1.6% price increase in the three months after August, according to the Trulia Price Monitor. That means that sales prices in November will probably be just 1.7% below where they were in January 2009. (This calculation is seasonally adjusted since we don’t want to count the seasonal gain in an assessment of whether the housing market is better off.)

Top image: Andy Dean Photography / Shutterstock.com

About the Author

  • Richard Florida is Co-founder and Editor at Large of CityLab.com and Senior Editor at The Atlantic. He is director of the Martin Prosperity Institute at the University of Toronto and Global Research Professor at NYU. More
    Florida is author of The Rise of the Creative ClassWho's Your City?, and The Great Reset. He's also the founder of the Creative Class Group, and a list of his current clients can be found here