by CalculatedRisk on 1/31/2012
The first graph shows the quarterly Case-Shiller National Index SA (through Q3 2011), and the monthly Case-Shiller Composite 20 SA and CoreLogic House Price Indexes (through November) in nominal terms as reported.
In nominal terms, the Case-Shiller National index (SA) is back to Q4 2002 levels, the Case-Shiller Composite 20 Index (SA) is back to February 2003 levels, and the CoreLogic index is back to April 2003.
Real House Prices
In real terms, the National index is back to Q1 1999 levels, the Composite 20 index is back to April 2000, and the CoreLogic index back to February 2000.
In real terms, all appreciation in the ’00s is gone.
In October 2004, Fed economist John Krainer and researcher Chishen Wei wrote a Fed letter on price to rent ratios: House Prices and Fundamental Value. Kainer and Wei presented a price-to-rent ratio using the OFHEO house price index and the Owners’ Equivalent Rent (OER) from the BLS.
This graph shows the price to rent ratio (January 1998 = 1.0).
On a price-to-rent basis, the Composite 20 index is back to April 2000 levels, and the CoreLogic index is back to February 2000.
In real terms – and as a price-to-rent ratio – prices are mostly back to 2000 levels and will probably be back to 1999 levels within the next few months.
Note: In late 2010 I guessed that prices would decline another 5% to 10% on these national indexes (from October 2010 prices). So far prices have fallen another 4% to 5% on these indexes.