I like to think I know everything about home prices, but I learned a few things from Prof. Chip Case at a conference yesterday (one of the men behind the Case-Shiller Home Price Index). Case is this fascinating guy whose brain is so swimming with numbers that you can almost see them crawling across his forehead.
Prof. Case showed me a chart of home prices for the top twenty markets in the country---all the numbers I’m used to reporting, but one column I hadn’t seen. The first column was percentage price drops from the peak in 2005-6, the –28 in Las Vegas, the –26 in San Diego, the –25 in Miami.
But the new column was percentage price increases from March of 2000 to March of 2008. Every single market was in the positive, except Detroit, which has its own, non-housing bubble issues. Miami prices are still up 109 percent from 2000. Los Angeles home prices are still up 107 percent from 2000.
Granted, many people bought homes from 2004-2006, and those folks have lost in the game. But the average span of the average American holding onto a home is 6-8 years, which means that the bulk of Americans have still done well with their single largest investment, despite all the price drops.
Granted again, many people pulled equity out of their homes in the form of lines of credit, but if they’re not planning on selling today, then they’re still in the plus column.
Also, the numbers that we’re reporting are perhaps not as bad as we all think because they’re being skewed by foreclosures. 39 percent of sales in California last month were foreclosures or short sales. Make that 65 percent in Sacramento last month. Average occupier homeowners are not dropping prices the way banks and lenders are with foreclosures. They’re taking their homes off the market, which leaves the bulk of the stats to the distressed homes.
Just thought I’d send you off to the weekend on a slightly more positive note than usual.
Questions? Comments? RealtyCheck@cnbc.com