I pointed out yesterday that, adjusted for inflation, nationwide home prices are now about where they were in the late 1980s. This backs up a point Yale economist Robert Shiller told me a few months ago: In real (inflation-adjusted) terms, we shouldn't be surprised if housing falls for the next several decades. It's happened in the past, and it could happen in the future.
Some reminded me that this is misleading: Housing is all about location, location, location. Some regions -- particularly those growing faster than the overall economy -- will do much better than others.
That's absolutely right. I pulled up the regional version of the S&P Case-Shiller Housing Index to see how different regions have fared over the last one-, two-, and 10-year periods. Have a look:
|
City/Region
|
Home Price Change, Year Over Year
|
Home Price Change, 2009-2011
|
Home Price Change, 2001-2011
|
| Phoenix |
(3.6%) |
(9.8%) |
(10.5%) |
| Los Angeles |
(5.4%) |
(3.5%) |
35.0% |
| San Diego |
(5.4%) |
(3.0%) |
16.8% |
| San Francisco |
(5.5%) |
(5.1%) |
0.7% |
| Denver |
(0.2%) |
(2.7%) |
2.2% |
| Washington, D.C. |
0.5% |
3.1% |
46.9% |
| Miami |
(4.4%) |
(7.9%) |
10.8% |
| Tampa, Fla. |
(6.1%) |
(10.3%) |
3.9% |
| Atlanta |
(11.7%) |
(18.5%) |
(19.7%) |
| Chicago |
(5.9%) |
(13.0%) |
(5.0%) |
| Boston |
(1.6%) |
(2.3%) |
15.4% |
| Detroit |
3.8% |
(2.3%) |
(36.9%) |
| Minneapolis |
(5.0%) |
(9.0%) |
(11.6%) |
| Charlotte, N.C. |
(2.0%) |
(6.3%) |
6.5% |
| Las Vegas |
(9.2%) |
(12.4%) |
(20.0%) |
| New York |
(2.3%) |
(4.0%) |
32.5% |
| Cleveland |
(1.1%) |
(5.5%) |
(7.7%) |
| Portland, Ore. |
(4.8%) |
(11.4%) |
22.1% |
| Dallas |
(0.8%) |
(4.9%) |
2.4% |
| Seattle |
(6.3%) |
(10.8%) |
17.3% |
Sources: S&P Case-Shiller and author's calculations. Figures not adjusted for inflation.
The standouts for me: Washington, D.C.'s rise over the last decade is still huge (thank you, government spending), Atlanta's 10-year decline is about the same as Las Vegas', and the 10-year gain of some big cities (New York, Los Angeles, Portland) is still considerable.
So yes, it is all about location. But big trends can still be noticed on a nationwide level. While home prices nationwide could drag on lethargically for years, I'm reasonably confident that home construction will make a solid rebound sooner than some expect. That could be good for the economy, and great for companies like KB Homes (NYSE: KBH ) , MDC Holdings (NYSE: MDC ) , and Meritage Homes (NYSE: MTH ) -- all three of which I've highlighted in my CAPS account as companies I think could benefit from that trend.
What do you think? Share your thoughts below.
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