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
What do you think? Share your thoughts below.
