Tag Archives: House price index

CR: Real House Prices, Price-to-Rent Ratio, City Prices relative to 2000

Real House Prices, Price-to-Rent Ratio, City Prices relative to 2000

by Bill McBride on 3/26/2013  

Case-Shiller, CoreLogic and others report nominal house prices, and it is also useful to look at house prices in real terms (adjusted for inflation) and as a price-to-rent ratio.

As an example, if a house price was $200,000 in January 2000, the price would be close to $275,000 today adjusted for inflation.  This is why economist also look at real house prices (inflation adjusted).

Nominal House Prices

Nominal House PricesThe first graph shows the quarterly Case-Shiller National Index SA (through Q4 2012), and the monthly Case-Shiller Composite 20 SA and CoreLogic House Price Indexes (through January) in nominal terms as reported.

In nominal terms, the Case-Shiller National index (SA) is back to Q2 2003 levels (and also back up to Q3 2010), and the Case-Shiller Composite 20 Index (SA) is back to November 2003 levels, and the CoreLogic index (NSA) is back to January 2004.

Real House Prices

Real House PricesThe second graph shows the same three indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices.

In real terms, the National index is back to October 1999 levels, the Composite 20 index is back to December 2000, and the CoreLogic index back to February 2001.

In real terms, most of the appreciation in the last decade 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.

Price-to-Rent RatioHere is a similar graph using the Case-Shiller National, Composite 20 and CoreLogic House Price Indexes.

This graph shows the price to rent ratio (January 1998 = 1.0).

On a price-to-rent basis, the Case-Shiller National index is back to Q4 1999 levels, the Composite 20 index is back to December 2000 levels, and the CoreLogic index is back to February 2001.

In real terms – and as a price-to-rent ratio – prices are mostly back to early 2000 levels.

Nominal Prices: Cities relative to Jan 2000

Case-Shiller CitiesThe last graph shows the bubble peak, the post bubble minimum, and current nominal prices relative to January 2000 prices for all the Case-Shiller cities in nominal terms.

As an example, at the peak, prices in Phoenix were 127% above the January 2000 level. Then prices in Phoenix fell slightly below the January 2000 level, and are now up 27% above January 2000 (I’ll look at this in real terms later). Some cities – like Denver – are close to the peak level. Other cities, like Atlanta and Detroit, are below the January 2000 level.

Read more at http://www.calculatedriskblog.com/2013/03/real-house-prices-price-to-rent-ratio.html#XwaRVmDdktvPvaDC.99

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PragCap: Housing Prices Are Booming Again….

Housing Prices Are Booming Again….


Looks like the nominal wealth boom isn’t solely a stock market phenomenon.  The Fed might just be getting the boom they want (at least in the asset classes that make people feel wealthier than they really are)….According to CoreLogic, home prices in the USA are back to bubble-era type appreciation levels:

“CoreLogic (NYSE: CLGX), a leading residential property information, analytics and services provider, today released its January CoreLogic HPI report.

Home prices nationwide, including distressed sales, increased on a year-over-year basis by 9.7 percent in January 2013 compared to January 2012. This change represents the biggest increase since April 2006 and the 11 th consecutive monthly increase in home prices nationally. On a month-over-month basis, including distressed sales, home prices increased by 0.7 percent in January 2013 compared to December 2012. The HPI analysis shows that all but two states, Delaware and Illinois, are experiencing year-over-year price gains.”

Chart via CoreLogic:

clogic Housing Prices Are Booming Again....

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