Biggest Price Drops from 2022 Peak: San Francisco, Seattle, Portland, Denver, Phoenix, Dallas, Las Vegas

20-City Index drops for 3rd month in a row, forming Double Top.  Only Washington DC sets a new all-time high.

The home price index for the 20 metros that the S&P CoreLogic Case-Shiller Home Price Index covers declined by 0.1% from the prior month, the third month in a row of declines. Year-over-year, the index was up 6.6%.

Year-over-year, wait a minute… today’s “January” 2024 reading is three months off the October 2023 peak, while January 2023 was seven months off the June 2022 peak. Year-over-year comparisons are meaningful when the index is very seasonal, and comparisons match the high in the current year to the high in the prior year, and the low in the current year to the low in the prior year. But this is not the case here. The highs are in different seasons (June v. October), because they were caused by factors other than the slight (if any) seasonality of the Case-Shiller index.

So the year-over-year change (+6.6%) compares today’s “January” reading which is three months off the October peak to January 2023 which was seven months off the June peak and was the bottom of a non-seasonal trough. For that same reason, the year-over-year changes will diminish over the next few months.

Today’s S&P CoreLogic Case-Shiller Home Price Index for “January” is a three-month moving average of home prices whose sales were entered into public records in November, December, and January. The fact that it is a three-month moving average irons out some of the seasonality.

The index uses the “sales-pairs method,” comparing the sales price of the same house over time, thereby eliminating the issues – including seasonality due to the seasonal change in mix – associated with median prices (see “Methodology” toward the end of the article).

The long view of the 20-Cities Index shows the mind-blowing surge over the past few years; and it shows a bizarre non-seasonal double top that has never occurred in the history of the index, with the first top in June 2022 and the second top in October 2023.

You can also see that there is little seasonality in the index going back over 20 years:

To qualify for the Most Splendid Housing Bubbles, the metro must have experienced home-price inflation since 2000 of at least 180%. The indices were set at 100 for the year 2000. Today’s index value for Miami, which we’ll get to in a moment, of 429 is up 329% since 2000, making Miami the most splendid housing bubble on this list.

Home-Price Inflation. By measuring how many dollars it takes to buy the same house over time via the “sales pairs” method, the Case-Shiller index is a measure of home-price inflation. So Miami had 329% home price inflation since 2000. By comparison, consumer price inflation, as measured by CPI, was 83% over the same period.

Prices were below their 2022 peaks in 9 metros of the 20 metros in the Case-Shiller index (% from their respective peak in 2022, month of peak):

1. San Francisco Bay Area: -13.4% (May 2022)
2. Seattle: -12.6% (May 2022)
3. Portland:  -7.9% (May 2022)
4. Denver:  -7.1% (May 2022)
5. Phoenix:  -6.5% (June 2022)
6. Dallas: -5.8% (June 2022)
7. Las Vegas: -5.1% (July 2022)
8. San Diego: -1.5% (May 2022)
9. Los Angeles: -0.3% (May 2022)…..

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Continue reading this article at Wolf Street.