bee Calculated Risk On 1/29/2025 10:17:00 AM
Today, in the Calculated Risk Real Estate Newsletter: Inflation Adjusted House Prices 1.1% Below 2022 Peak
ExcerPT:
It has been over 18 years since the housing bubble peak. In the November Case-Shiller House Price Index Released Yesterday, the seasonally Adjusted National Index (SA), was reported as being 77% Above the Bubble Peak in 2006. However, in real terms, the National Index (SA) is about 12% Above the bubble peak (and historically there has been an upward slope to real house prices). The Composite 20, in real terms, is 3% above the bubble peak.
People usually graph nominal house prices, but it is also important to look at prices in real terms. As an example, if a house price was $ 300,000 in January 2010, the price would be $ 436,000 today adjusted for inflation (45% increase). That is why the second graph below is important – this shows “real” prices.
The third graph shows the price-to-interest ratio, and the fourth graph is the affordability index. The last graph shows the 5-year real return based on the case-shiller National Index.
…The second graph shows the same two indexes in real terms (Adjusted for inflation using CPI).
In Real Terms (Using CPI), the National Index is 1.1% below the Recent Peak, and the Composite 20 Index is 1.3% below the Recent Peak in 2022. The Real National Index and the Composite 20 Index Increased Slightly in Real Terms in November in November .
It has now been 30 months since the real peak in house prices. Typically, after a sharp increase in prices, it takes a number of years for real prices to reach new highs (See House Prices: 7 Years in Purgatory)
There is much more in the article!