More Case-Shiller Charts

Kelly Bennett has already done a thorough writeup of the August Case-Shiller home price data, so I thought I’d just add a couple of charts into the mix.

The first shows how low-priced homes have suffered in comparison to higher-priced homes. At this point, the low-priced tier of the index has fallen almost twice as far from the peak as the high-priced tier:

The second graph provides a lot of insight into why this has happened. During the boom, the frenzy of easy lending was concentrated among borrowers of low-priced homes. The huge decline from the peak in the low tier is just the flipside of the incredible boom-time runup in which prices of lower-end homes increased far faster on a percentage basis than those of more expensive properties.

The next two graphs present exactly the same price information except that the prices have been adjusted to account for the effects of inflation as measured by the Consumer Price Index. This approach details how much home prices have changed not in terms of dollars, but in comparison to everything else (or at least that subset of “everything else” measured by the CPI — but that’s a whole other topic).

After accounting for inflation, even high-end home prices are down nearly a third from the peak. Low-priced homes have dropped almost in half by this measure.

Despite the price drops, homes remain 30 percent more expensive on an inflation-adjusted basis than they were in 2000.

Keep in mind that the Case-Shiller data lags quite a bit. The latest figure is calculated based on sales closed in June, July, and August. Here at the end of October prices have almost certainly dropped further than what you see above.

— RICH TOSCANO