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The Most Splendid Housing Bubbles in America, October Update

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Via Wolf Street

Despite startup millionaires, house & condo prices in San Francisco Bay Area and condo prices in New York fall from year ago. Seattle down again. Los Angeles barely up from year ago. Las Vegas loses steam, Phoenix, others running hot.

San Francisco Bay Area House Prices

Prices of single-family houses in the five-county San Francisco Bay Area – the counties of San Francisco, San Mateo (northern part of Silicon Valley), Alameda and Contra Costa (East Bay), and Marin (North Bay) – fell 0.6% in August from July, were down 0.1% from August 2018, and were about flat with June 2018, according to the S&P CoreLogic Case-Shiller Home Price Index released today. It was the fourth month in six that prices were down year-over-year, the first year-over-year declines since April 2012.

In other words, despite the endlessly hyped job that the flood of IPO startup millionaires washing over the Bay Area would do to the housing market, house prices have been flat for 14 months, and have now formed a cute double-peak:

The Case-Shiller Index is a rolling three-month average. Today’s release represents closings that were entered into public records in June, July, and August. The index was set at 100 for January 2000. San Francisco’s index value of 281 means that prices have surged 181% since January 2000. Every one of the most splendid housing bubbles on this list has or had an index value of over 200, meaning that house prices have at least doubled, either during Housing Bubble 2 or during Housing Bubble 1.

Condo prices in the San Francisco Bay Area also ticked down in August and fell 0.3% below the levels of August 2018, the fourth month of year-over-year declines in the past six months. Prices are now just a tad below where they’d been in May 2018:

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New York Condo Prices:

Condo prices in the vast New York City metro ticked up a smidgen in August compared to July, but fell 0.1% below the level of August 2018, and are roughly flat with January 2018:

While the Case-Shiller Index uses standard Metropolitan Statistical Areas for many of its city indices, its index for New York City is based on a custom area covering numerous counties in New York, New Jersey and Connecticut “with significant populations that commonly commute to New York City for employment purposes.”

Seattle House Prices:

In the Seattle metro, prices of single-family houses declined 0.3% in August from July, but given the sharp 1.6% month-to-month drop in August 2018, the index was up 0.7% year-over-year. It is down 1.4% from the peak in June 2018:

The Case-Shiller Index uses “sales pairs,” comparing the sales price of a house in the current month to the price of the same house in the prior transaction, however many years ago that may have been (methodology). This makes the index immune to the problem of mix, which can skew “median price” indices, and the problem of a few big outliers that can skew “average price” indices.

Los Angeles House Prices:

The Case-Shiller index for the Los Angeles metro was unchanged in August compared to July, which whittled down its year-over-year gain to 1.0%. The index has been essentially flat for four months:

San Diego House Prices:

House prices in the San Diego metro fell 0.2% in August from July and were up 2.3% from August 2018:

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Portland House Prices:

In the Portland metro, house prices were flat in August compared to July, and were up 2.6% from August last year:

Denver House Prices:

House prices in the Denver metro declined 0.2% in August from July, which trimmed the year-over-year gain further to 2.9%, the smallest such gain since April 2012:

Las Vegas House Prices:

House prices in the Las Vegas metro declined 0.2% in August from July, which whittled down the year-over-year gain to 3.3%, the smallest such gain since August 2012, and was down from a series of double-digit gains from January 2019 back to October 2017. The index is 17% below the nutty peak of 2006:

Phoenix House Prices:

House prices in the Phoenix metro rose 0.9% in August from July and were up 6.3% from last year, with a new housing bubble in full swing, though it remains 15% below the crazy peak of 2006:

 

Boston House Prices:

House prices in the Boston metro ticked up 0.1% in August from July, which reduced their year-over-year gain to 3.0%:

Washington DC:

House prices in the Washington D.C. metro were flat in August compared to July and down a tad from June. Compared to August last year, house prices rose 2.8%:

Miami House Prices:

In the Miami metro, house prices rose 0.3% in August from July and 3.6% year-over-year. They’re still down 12% from their dazzling craziness at the end of 2006:

Tampa House Prices:

House prices in the Tampa metro rose 0.3% in August from July, which trimmed the year-over-year gain to 4.3%, the slowest such gain since August 2012. The index remains 8% below the crazy peak of 2006:

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The Case-Shiller index, by comparing the sales price of a house in the current month to the price of the same house in the prior transaction, tracks the percentage increase of amount it takes to buy the same house over time. Thus, it tracks the purchasing power of the dollar with regards to houses in various markets, which makes it a measure of “house-price inflation,” which is what is depicted in the charts above because the houses didn’t double in size or become twice as opulent. But the dollar lost its purchasing power with regards to houses, and that’s what is happening here.

By the measure of median prices, ironically, house prices in the Bay Area dropped the most in Silicon Valley. Read... Housing Bubble in Silicon Valley & San Francisco Bay Area Turns to Bust Despite Low Mortgage Rates & Startup Millionaires

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