Friday, September 27, 2013

Case-Shiller: Metro Denver home price index up for 19th straight month

Case-Shiller released its home price index for July 2013 this week. The home price index for the Denver area rose 1.5 percent percent from June to July, and rose 9.6  percent, year over year, from July 2012 to July 2013.  The year-over-year increase in July was the nineteenth year-over-year increase in a row for Denver. July also marks a second month above previous-peak levels for the metro Denver index. The index peaked in July 2006 at 140.3, and the index value during July 2013 was 145.6. The first graph shows the recent increase to new peak levels:

 According to S and P's press release, home prices nationwide continued to show some signs of growth:
“Home prices gains are holding their 12% annual rate of gain established by the two Composite  indices in April,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones  Indices. “The Southwest continues to lead the housing recovery. Las Vegas home prices are up 27.5%  year-over-year; in California, San Francisco, Los Angeles and San Diego are up 24.8%, 20.8% and  20.4% respectively. However, all remain far below their peak levels.

“Since April 2013, all 20 cities are up month to month; however, the monthly rates of price gains have  declined. More cities are experiencing slow gains each month than the previous month, suggesting  that the rate of increase may have peaked.

In year-over-year comparisons for July, all of the twenty cities measured reported increases.  The largest increases were in Las Vegas and San Francisco with year over year increases of 27.5 percent and 24.8 percent, respectively.

The first chart shows trends in the Case-Shiller index for the Denver area and for the 20-city composite index. It is clear that Denver did not experience the kind of price bubble that occurred in many other metropolitan areas, and consequently, the index has not fallen nearly as far in Denver compared to the larger composite. The metro Denver index value is at the highest value seen since 2006.

The 20-city composite is down 21 percent since it peaked in July 2006, but the Denver index is up 3.8 percent from its August 2006 peak.

The second chart compares year-over-year changes in the Denver area index and in the 20-city composite. Overall, the index has been less volatile in Denver than has been the case for the 20-city composite. The year-over-year change in the 20-city composite during December was positive for the fourteenth month in a row.

After many months of higher growth rates in Denver than in the 20-city index, the Denver index was surpassed in March 2013 as the 20-city index YOY growth rate rose to 10.9 percent. The composite index growth rate has now outpaced the Denver metro rate for five months.