America’s Most Splendid Real Estate Bubbles: November Update


A housing price inflation pandemic.

By Wolf Richter for WOLF STREET.

Home prices jumped 7.0% in the United States, according to the Case-Shiller Home Price Index released today. Other indices pointed to similar price spikes. Home prices are going crazy despite a terrible economy. They’re excited about low interest rates, the $ 3 trillion in cash that the Fed has thrown into the markets, the fear of inflation pushing people into durable assets, working from home pushing people out. looking for a bigger place, wanting to buy now before putting the current home on the market, and moving from rental apartments and condos in high-rise buildings to single-family homes. And condos, as we’ll see in a moment, aren’t universally hot.

House prices in Los Angeles:

Home prices in the Los Angeles subway in September jumped 1.3% from August and 7.7% from September last year. They are now 12.9% above the peak of the totally crazy real estate bubble 1, have almost doubled (+ 93%) since the start of 2012, and have more than tripled since January 2000 (+ 209%):

The Case-Shiller Index was set at 100 for January 2000 in the 20 cities it covers. Los Angeles’ current index of 309 means home prices have jumped 209% since January 2000. That makes Los Angeles the best real estate bubble on this list.

For Los Angeles, the Case-Shiller Index provides sub-indices for condominiums and for the high, mid and low-end home segments. In the low-end segment (black line) – where people can least afford price increases – prices are up 10.2% from September of last year, after nearly quadrupling since January 2000 (+ 280%). During the housing bubble 1 the bottom level rose the most, and during the housing crisis it plunged the most, -56% peak to peak. High-end prices (green line) increased 7.6% year-on-year and 186% compared to January 2000:

The Case-Shiller House Price Index avoids some of the distortions inherent in median and average price indexes, as it is based on “sales pairs”, comparing the selling price of a house sold to the market. the current month priced at the same house when it was previously sold, and this goes back decades. Today’s post for “September” is a three-month moving average of the closures that were recorded in public records in July, August and September. So that’s the timetable we’re looking at.

House prices in San Diego:

The Case-Shiller Index for the San Diego subway jumped 1.8% in September from August and 9.5% from a year ago:

It is about “inflation of house prices”: loss of purchasing power of the dollar.

Because the Case-Shiller index compares the selling price of a house in the current month with the price of the same house When previously sold, it indicates how many dollars it takes over time to buy the same home. In other words, it measures the purchasing power of the dollar relative to houses. This makes the Case-Shiller Index a measure of “house price inflation”. And that’s all it really is – the dollar’s loss of purchasing power when it comes to homes.

San Francisco Bay Area:

House prices in all five San Francisco Bay counties – San Francisco, San Mateo (northern part of Silicon Valley), Alameda and Contra Costa (East Bay), and Marin (North Bay) counties – have increased by 1% in September. August and 6.0% from a year ago. The index has more than doubled since 2012 and almost tripled since 2000:

But condo prices in the Bay of Five County area fell for the fourth consecutive month and are down 2.3% from a year ago, and are back where they were in March 2018. Apartment prices in San Francisco itself have fallen dramatically. further amid a historic record glut of condos, with a median price down 12.8% year-over-year. But the Case-Shiller Index covers a large area around the bay, including those where refugees from San Francisco are moving, and some of them are seeing apartment prices rise:

Seattle home prices:

The Seattle Subway Case-Shiller Index jumped 1.2% in September from August and 10.1% year-over-year. It has more than doubled since 2012 and exceeds the peak of the real estate bubble 1 by 46%:

New York condo prices:

The Case-Shiller area for its New York index includes many counties in the states of New York, New Jersey, and Connecticut “with large populations who typically come to New York for employment.” This area is much more diverse than Manhattan itself. Condo prices in this vast metro have been essentially stable since September 2017 and are down 2% compared to the October 2018 high:

Portland Home Prices:

Portland metro house prices jumped 1.3% in August from September and 7.6% year-over-year and have doubled since 2012:

Miami House Prices:

Housing prices in the Miami metro were up 1.0% in September from August and 5.6% from a year ago. The index is approaching its ridiculous high level in the housing bubble 1, missing only 7.4%:

Tampa House Price:

The Case-Shiller Index for the Tampa subway jumped 1.4% in September from August, and is up 7.5% year-on-year, and thus topped its previous crazy bubble peak of 2006:

Washington DC:

Washington DC subway house prices jumped 1.0% in September from August and 7.0% year-over-year, but they’re just a little shy of their peak in the real estate bubble 1:

Boston House Prices:

Home prices on the Boston subway jumped 1.5% in September from August and 7.7% year over year:

Prix ​​Denver House:

Home prices on the Denver subway were up 0.6% in September from August and 6.0% year over year. Nice housing bubble 2, but not really a housing bubble 1:

Prix ​​de Phoenix House:

Home prices in the Phoenix subway soared 1.9% in September from August and 11.4% year-over-year, the hottest house price inflation of all. markets from this Splendid Housing Bubbles list. But the index remains down 4% from its peak in the housing bubble 1 in 2006:

Las Vegas House Prices:

Home prices in the Las Vegas subway were up 0.8% in September from August and 5.4% year over year. But they remain down 12.6% from their ridiculous peak in the housing bubble 1:

Dallas House Prices:

The Case-Shiller Index for the Dallas subway – Collin, Dallas, Delta, Denton, Ellis, Hunt, Johnson, Kaufman, Parker, Rockwall, Tarrant and Wise counties – rose 0.9% in September from to August and 2.6% p.a – over the year, the coolest house price inflation on this list of the most splendid real estate bubbles:

Dallas is also the last entry on this list, with house prices having “only” doubled since 2000 – which means 100% house price inflation in 20 years. The remaining 20-city Case-Shiller cities have experienced home price inflation of less than 100% over the past 20 years and have not made the reduction.

Work from anywhere, unemployment crisis, oil crisis, people are looking for a less crowded cheaper place to live, the land is rushing to buy houses. Lily… I’m in awe of how quickly rents are plunging in San Francisco, New York, Boston, Los Angeles, and other expensive cities. Rents are even falling in Houston and Dallas. The national average turns negative

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