Low-Priced Home Whackage in February’s Case-Shiller Index

(Update: The editorial overlords have requested that I define “whackage.” Whackage is simply that which results from something having been whacked.  Put another way, it is a state of having been recently whacked.  The overlords correctly point out that this slang is used mostly by financial nerds, but anything at all that’s capable of being whacked either metaphorically or physically is at risk for whackage.)

Home price data that is more timely than the Case-Shiller index has suggested that San Diego prices, on the whole, may be undergoing a bit of a spring thaw.  So I don’t make too much of the fact that February’s Case-Shiller index (which is calculated based on sales that took place in December, January, and February) declined by 1.3 percent in aggregate.

It is interesting, however, that the low-priced tier of the index dropped as much as it did.  After weathering the recent fall/winter lull better than the other tiers, the low-priced homes were spanked for 2.7 percent in February.  The middle tier was down 1.4 percent and the high tier by .5 percent for the month.

This looks like somewhat of a catch-up move which reverses the low tier’s previous strength and gets it more into line with recent price changes in the overall market.  So the decline is probably not significant predictiveness-wise.  But, it’s interesting that the previous outperformance of that tier seems to have been more due to statistical noise (eventually corrected) than to actual strength in real-world prices.

Below is the usual array of monthly graphs.  Since the peak:

…since the year 2000:

…and since the 1989 start of the index (inflation-adjusted):

Rich Toscano is a financial advisor with Pacific Capital Associates*.  He can be contacted at rtoscano@pcasd.com.