Want some great news? The value of your home is now back to what it was worth in 2003 according to recent Case-Shiller housing data released on August 30, 2011. How is that good news, you ask? It’s not, really. If your home had the same rate of increase as the national average, it gained 3.6% from the first quarter of 2011. If the 2003 statistic wasn’t bad enough, the value of your home actually decreased 4.1% in the first quarter of 2011 so that “great news” only means that your home has only lost 1.5% in value so far this year.
If you’re a homeowner and don’t know what the Case-Shiller Home Price index is all about, it’s time that you learn. If you’re going to be selling your home any time in the foreseeable future, the Case-Shiller index is a resource that you must understand. Here’s the scoop.
First, some history. Karl Case, Robert Shiller, and Allan Weiss are economists. Mr. Case developed a method for comparing sales of the same homes in order to develop trends. In other words, he measured value by comparing the selling prices over time on one home. For his first study, he compared the selling prices for all homes in Boston and by combining the data, he could tell if the price of Boston was going up or down.
Mr. Schiller studied behavioral finance specifically in the area of price bubbles. Together, along with a graduate student (Weiss) the Case-Shiller Index was born. They later started their own company which was purchased by Standard and Poor’s who now publishes the data on the last Tuesday of every month reporting results from two months ago. If the data is published on the last Tuesday in August, it is based on trends from two months prior in June.
There are 20 major cities tracked along with the national average. The latest results show that the national averaged plunged 5.88% from the same time one year ago. Just when you thought the depressing news was over, this means that your home was worth nearly 6% more in June of 2010 than it was in June of 2011. If you own a $150,000 home, you lost $9,000 of value in just one year.
If you live in Minneapolis, Minnesota, the news is much worse. In one year, you have lost 11% of your home’s value. That’s $16,500 on a $150,000 home. Other cities who have lost more value than the national average include Portland, Phoenix, Chicago, Tampa, Detroit, Seattle, Cleveland and Las Vegas.
Of the 20 cities who have their own measure, Washington D.C. was the winner. Those with homes in that area only lost 1.2% of value in the past year. Other cities who beat the national average were Boston, Denver, Los Angles, New York, Charlotte, Dallas, Atlanta, Miami, San Diego, and San Francisco. (barely)
Although the Case-Shiller index isn’t going to tell you how to price your home if it is up for sale, it can give you an accurate indication of sentiment. The current sentiment is that home prices continue to fall and for many homeowners, making a profit isn’t practical right now and it probably won’t be for years to come. When the last Tuesday of the month rolls around, look up the Case-Shiller home price index. Or maybe you shouldn’t. There isn’t a lot of good news in those numbers right now.
Source: http://www.businessinsider.com/case-shiller-june-charts-2011-8
This article was written by a PFI contributing writer.
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