by calculated risk September 26, 2024 12:26:00 PM
In today’s Calculated Risk Real Estate newsletter: Inflation-adjusted home prices are 1.5% below their 2022 peak.
extract:
It has been over 18 years since the peak of the bubble. at July Case-Shiller Home Price Index On Tuesday, the seasonally adjusted sovereign index (SA) was reported to be 74% above its 2006 bubble peak. However, in real terms the sovereign index (SA) is about 11% above its bubble peak. There was an upward slope in real house prices). In fact, the composite index of 20 is 2% above the bubble peak.
People usually graph nominal home prices, but it’s also important to look at actual prices. For example, if your home was worth $300,000 in January 2010, after adjusting for inflation, it would cost $432,000 today (a 44% increase). This is why the 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 five-year real returns based on the Case-Shiller National Index.
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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 1.5% below its recent high, and the Composite 20 Index is 1.8% below its recent 2022 peak. Both indices rose in July in real terms.
It has now been 26 months since house prices truly peaked. Typically, after a sharp rise in prices, it takes years for real prices to reach new highs. House prices: 7 years in purgatory)
