Real House Prices Decline

Case-Shiller indices came out today. August prices for the 20 city index declined m/m, and Zillow’s forecast for the CS 20 city index in September was for another decline. This is shown in Figure 1:

Figure 1: Case-Shiller 20 city home prices (blue, left log scale), Zillow forecast of Case-Shiller based on Zillow prices from September for August, from October for September (red +, right log scale), Zillow single family home prices, in 2018$ (brown, right log scale), all deflated by CPI-All. Source: Zillow, S&P, BLS, and author’s calculations.


17 thoughts on “Real House Prices Decline

  1. joseph

    Probably just that demographics thing that Kopits is always talking about. There simply aren’t enough people to fill up all the houses anymore.

  2. Willie

    This decline is concurrent with a decline in mortgage rates, if I’m not mistaken. A knuckle dragger like me would expect hose prices to increase a bit when mortgage rates decline.

    This has to be the most grindingly slow end of a recovery on record. The economy seems to be flirting with recession, but hasn’t gotten serious about falling apart yet.

  3. pgl

    This chart shows real housing prices since Trump took office, which have risen by less than 6% over this near 3 year period. Yea – we did see Bruce “no relation to Robert” Hall getting confused as usual claiming they rose by 5% in just a single year. Of course he had some subset of housing and he did this in nominal terms not inflation adjusted terms. I guess to this date he has not learned the difference between nominal v. real.

    I forget the name of the kind commenter who took a longer term FRED graph and did the inflation adjustment. His chart showed that real housing prices rose by more than 30% over the four year period before Trump became President. Then again Janet Yellen kept interest rates really lowed. And for that Trump did not replace her as I guess he wanted a tall dude and not some woman who is only 5’3″. Go figure!

  4. Barkley Rosser

    It is often hard to nail down what is really going on with housing markets nationally. This is both because different data sources are often not in agreement with each other. Part of the reason for that is that indeed there is no national housing market; it is a bunch of local markets, and they van be doing very different things from each other, and I suspect are right now, although I have not dug down to see which locations are going down and which are going up and by how much.

    But it does seem that the overall average for those 20 big metro areas has turned modestly negative for now after having not been moving up rapidly for some time.

    1. Menzie Chinn Post author

      Bruce Hall: Truly, you really should understand the data you are discussing. The Case-Shiller indices were an advance over other indices in that they are repeat-sales home price indices. The problem you mention is then not an issue.

    1. pgl

      You pick some weird if not stupid sources. Try FRED:

      30-Year Fixed Rate Mortgage Average in the United States

      While your source wants to claim mortgage rates are rising (Trump blaming the FED I guess), a reliable source of data shows how low mortgage rates are.
      Come on Bruce – stop lying to us and learn to use more reliable sources for data.

  5. Bruce Hall

    and what effect do state policies and taxation have on the housing market?

    and how much does California (and similar high-tax states) skew the picture?

    especially since the rest of the country isn’t subsidizing California and other high-tax states’ home buyers with tax write-offs (which could impact both demand and selling price)

    1. pgl

      Wait, wait – California is the reason why housing prices are down? Good God Bruce – please read your own BS sources. The first one whines housing prices are high in California. Could you at least TRY to read what Menzie wrote before going off on your own misreading from your own BS sources. AEI – pathetic.

  6. Moses Herzog

    I already felt the fed funds rate move down was a mistake. In fact I view the last two moves as both mistakes. But to Have Alan Blinder say in essence the same thing, makes me feel much better about my contention. Rate moves down do more harm than good here. May I add that Blinder’s thought’s could never be doubted on any topic as he co-wrote my undergrad Economics textbook:

    That last part was a joke people. It’s worthy to note Blinder’s reputation (true or false) is one of being a “dove”.

    1. pgl

      READ the title SLOWLY dumba$$:

      “Real House Prices Decline”

      Only the dumbest person on the planet would find a state where prices are “among the highest in the nation” as some sort of commentary on what Menzie was pointing out. I bet your dog has a good laugh at how his master chases his own tail!

    2. pgl

      Gee Brucie – I read your two little links. Yea – California residential investment has slipped. That has been the case for the entire nation. Now there was some idiot who tried to deny this established point when I made it a while back. Let’s see – hey, his name is Bruce Hall too. Go figure.

      Your 2nd link says prices in some cities have declined of late. Well DUH – Menzie has been noting that for a while too. And you counter with some comment as to how high they are?

      Yes – you are truly the dumbest person here. Take a bow!

    3. pgl

      Lance Lambert wrote your 2nd link and it seems he is almost as dumb as Bruce Hall:

      “Nationally home prices still rose 6.9% year over year in April. But here’s the thing: That’s actually the lowest price growth in five years.”

      This sounds like Bruce Hall’s other “expert” who claimed prices rose by 5%. Case-Shiller show lower NOMINAL price increases but then here is the simple point Bruce Hall will never figure out. Inflation adjusted or real price increases are less than nominal price increases because – wait for it – inflation is not zero. Basic economics that Bruce Hall continues to miss over and over again.

      But I’ll given Lance a little credit – at least he knows real housing prices were rising during Obama’s 2nd term! Something else than escapes the excuse for a mind that sits on top of Bruce Hall’s shoulders.

  7. Moses Herzog

    I never went “trick or treating”. Boo-hoo…. boo-hoo….. [sniffle sniffle] boo-hoo boo-hoo…. A deprived childhood.

    Eh, you learn to make up for some things as an adult. That’s all I’ll say about that kids. Watch out for black cats. If the black cats cross your path they bring severe bad luck, and the detour is worth it, to avoid…… trouble. But even MORE scary than black cats, is “The Cat Inside”:

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