U.S. home prices fell ~1.2% respectively in October versus September, with 19 of 20 cities covered by the indices decreasing over the month. Year over year drops of the 10- and 20-City Composites fell -3.0% and -3.4% respectively versus October 2010.

As of October 2011, average home prices across the U.S. are back to their mid-2003 levels. (See chart below) Measured from their June/July 2006 peaks, the peak-to-current declines for the 10-City Composite & 20-City Composite are -31.9% and -32.1%, respectively.


click for larger chart

Source: S&P Case Shiller


More charts after the jump



Year over Year Percentage Price Change in Case Shiller Home Price Index



20 Metropolitan Region Monthly changes

Category: Real Estate

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

17 Responses to “Case Shiller: Home Prices Fell 3.4% Year-over-Year”

  1. snider92 says:

    And those declines are just nominal, even worse in real terms. Real estate has been a disaster as a store of value over the last decade, and I expect that to continue to be the case.

    What if interest rates went up?
    What if government support for mortgages was reduced?
    What if the federal deficit was reduced?
    What if all of the non-current mortgaged homes were foreclosed and sold?
    What if citizens realized the poor intrinsic value of modern suburbia?

    All of those things should happen in my opinion, and they would have a deleterious effect on home prices.

  2. Ted Kavadas says:

    RE: “As of October 2011, average home prices across the U.S. are back to their mid-2003 levels.”

    IMHO, the foremost question remains as to whether the housing market is at or near a “lasting bottom” with regard to price. I don’t believe that it is, for a variety of reasons.

    For those interested, I just posted a summary of and my comments on the December 2011 Zillow Home Price Expectation Survey, which is a survey of 100+ forecasters. It provides the forecasters’ predictions for housing (as depicted by S&P/Case-Shiller) through 2016:


  3. MayorQuimby says:

    Wake me up when we are at 2.5x income. Oh and subtract from that any losses in purchasing power due to fed easing monetization and commodities blast off ie theft via liquidity.

    I’d say 1.5x to 2x income is coming – especially after taxes spike to attempt pay for all these metric tons of debt.

  4. ironman says:

    Here’s a little different, and slightly better, way to look at the data, which links median house prices to median income, from which we can extract something very similar to the Case-Shiller index’ data, but for the entire U.S., rather than the 10 or 20 city composite data. (Since the Case-Shiller indices are updated monthly, it has a greater advantage for timeliness.)

    Going by our measure, home prices are still about 12-14% above what Ted Kavadas would describe as a “lasting bottom”, based upon the current level of median household income in the U.S., give or take a percent.

  5. 873450 says:

    Case Shiller’s 20-city regional index indicates Washington DC area residential prices stopped collapsing and began recovering April 2009. Since then, except for an occasional hiccup, home prices there have steadily risen more than 9% without looking back. It is the only metro region where prices did not fall during the past 12 months.


    The NYT published an article about members of Congress living in a prosperity bubble while the overwhelming majority of their constituents are suffering and losing ground, with tens-of-millions of them losing everything. Half the Congress (NYT didn’t, but should have, grouped in White House and SCOTUS) consists of millionaires bending over backwards maintaining the mother-of-all socialist, safety net entitlements they installed almost overnight under TBTF. At the same time, Congress is preaching austerity and debating safety net cuts to Social Security, Medicare, Unemployment Insurance, Food Stamps, … Never have so few benefited so much by injuring so many …

    A few citations:

    “While the median net worth of members of Congress jumped 15 percent from 2004 to 2010, the net worth of the richest 10 percent of Americans remained essentially flat. For all Americans, median net worth dropped 8 percent, based on inflation-adjusted data from Moody’s Analytics.”


    “… House members saw the stocks they owned outperform the market by 6 percent a year. Their research from several years ago found that senators did even better, at 12 percent above average. The researchers attributed the performance to a “significant information advantage” that lawmakers hold by virtue of their positions and the fact they are not bound by insider-trading law.”


    “While the housing collapse nationwide has hurt many Americans, lawmakers still find the real estate sector the most popular place to park their money, statistics from the Center of Responsive Politics show, and members of Congress continue to profit from their investments there.”



  6. bear_in_mind says:

    @Ironman: That’s a great read! Thanks for sharing.

    I concur that the boost from Tax Reform Act of 1986 began a mal-investment trend in U.S. real estate. In the SF Bay Area, there was a boom from 1987-1990 that sent housing values rocketing +/- 30 percent over three years… then prices came crashing back to earth. Most folks who bought during ’89 or ’90 weren’t able to get “break-even” bids (excluding the sales fees and commissions carve-out) until 1997-98. To truly get whole, most had to wait until ’99-’00 — a full decade. And that was in the go-go Silicon Valley with median incomes rising and VC freely flowing.

    In comparison, that Silicon Valley boom-bust was peanuts compared to the house price explosion the U.S. experienced from ’03 to ’07. I suspected things were leveling-off some, but if you review the most recent (Oct 2011) DataQuick real estate numbers for California (http://dqnews.com/Charts/Monthly-Charts/CA-City-Charts/ZIPCAR.aspx), the continued price erosion is stunning. It’s far worse than Case-Shiller would indicate.

    Coupled with declining median incomes, elevated indebtedness, erosion in federal and state revenues, high-UE and Baby Boomer demographics, it’s anyone’s guess when/where real estate establishes a lasting bottom. It’s heartening that many other regions are helping to stabilize national prices, but if CA is going to lead country out of this morass, it may be a long wait, indeed.

  7. VennData says:

    The main problem with real estate today is developers’ unwillingness to provide the modern amenities that singles demand. How many times have you heard this one? “My doorman saw me come home with another rudester, I wish my building had a rudester entrance.” Or “Nice plans. Lot’s of square footage, but where’s the rudester entrance?”

    – Dr, Lawrence Yun (NAR Chief Economist)

  8. edwards183 says:

    @ironman –

    While I like the way that they like median house price to median income, I really think that the way to use this data is to look at median monthly house payment. This median cost analysis doesn’t take into account the lower interest rates of today as compared to other points on the graph. If you are going to use a metric like household income, then you have to use a metric like monthly payment. That is how a huge percentage of people make the affordability judgment. They are leaving a leg of the stool out if they only count income and home price.

  9. Joe Friday says:


    Here’s a little different, and slightly better, way to look at the data, which links median house prices to median income

    The only problem there is that “median household income” is not a measure of anything.

    David S. Johnson, who is the chief of the Housing and Household Economic Statistics Division at the Census Bureau, has addressed the reason why ‘Household Income’ was rising while actual real wages and salaries were declining. He pointed to the fact that ‘Household Income’ can include other sources of income besides wage and salary earnings. He also provide the example that a household could have added a part-time worker, thereby raising the income of the household, while simultaneously bringing down the median wage.

    My example is of a couple that increased their ‘Household Income’ by working double the number of hours, but reduced their actual standard of living as well as their median wage. His original income was $100,000 annually, and his spouse was a homemaker. He lost his job, and his new job only pays $75,000 and his wife now works full time earning $45,000 annually. “Household Income’ up, real wages per hour worked down.

    “Median Household Income” would actually measure something only if they were comparing the same sets of households over time, but they are merely examining the aggregate.

    It’s a faulty metric.

  10. Joe Friday says:


    Speaking of the Yun Man, he was asked how the National Association Of Realtors could have possibly overcounted homes sales by one million homes ?

    PRATT: So explain to viewers, how do you lose a million homes?

    YUN: Well, let’s look at the facts of what does not change. It doesn’t change the fact that a realtor out on the street who may have sold eight homes, the person sold eight homes. Remax, Coldwell Banker, they sold tens of thousands of homes. That figure does not change. The figure that is changing is due to the aggregation problem. You are adding up the figures and what we had included in our analytics is that certain number of homes would be for sale by owner and what happened during the housing market downturn was that for sale by owner market got crushed. As a result people were turning towards realtors, seeking their assistance and as a result, more homes were being sold through the realtor data base and hadn’t been showing up.


    HUH ?

  11. It can be folly to make investment decisions based on CSI with its narrow universe and measuring agin “last year”. Looking at November numbers instead of October, the Realty Bubble Monitor update reveals that from the Feb/2011 bottom, Existing Home median price is up 5% & sales are up 34% from their 2010 low. The $165k 2011 median price is only $7k (4%) below the long-term Price/median income trend. $177k is the trend target for 2012.

    Realty Bubble Monitor charts: http://trendlines.ca/free/economics/RealtyBubbleMonitor/RealtyBubbleMonitor.htm

  12. flocktard says:

    @ Bear in mind, who writes :I concur that the boost from Tax Reform Act of 1986 began a mal-investment trend in U.S. real estate. In the SF Bay Area, there was a boom from 1987-1990 that sent housing values rocketing +/- 30 percent over three years”

    In the New York area, precisely the opposite happened. I fail to see how reducing the marginal rate to 28%from 50% helps real estate- it should kill it. If I’m carrying $10,000 in property taxes and mortgage interest, my deductions are worth a lot more to me at at 50% marginal rate than a 28% one. Unless there was some odd extraneous force working in the Bay area at that time, I don’t see how real estate got juiced. It had a devastating effect around here, and from what I remember, most of the country.

    The website you linked to claims that TEFRA 1986 incentivized mortgages and real estate debt, but I remember the result being the creation of the “see through” office building. I think the site’s logic is unbelievably flawed, and is redolent of the same misplaced hunting for villains we see in today’s housing debate.

  13. bear_in_mind says:


    You wrote, “The website you linked to claims that TEFRA 1986 incentivized mortgages…”. In fact, I provided a link to DataQuick, not TEFRA.

    The Tax Reform Act of 1986 had a massive amount of changes to tax-advantaged investments, credits, depreciation, business expenditures, etc. One can conceive a positive correlation between a substantial decrease in marginal tax rates and the concomitant increase in post-tax wages leading to inflation in real estate prices. But I’m not a CPA, so I’d recommend you check out David Cay Johnston’s writings for more granular details.

    I would note that the Garn-St. Germain Depository Institutions Act was passed in 1982, allowing S&L’s to raise interest rates on deposits, make commercial and consumer loans, and removing restrictions on loan-to-value ratios. At the same time, the regulatory staff at the Federal Home Loan Bank Board was slashed. Now THOSE FACTORS directly relate to the onset of the S&L Crisis and real estate crashes (i.e. “see-through office buildings”) seen in many markets from 1986-92.

    Finally, you commented on the so-called “… misplaced hunting for villains we see in today’s housing debate.” You leave readers unclear if you’re: 1) perturbed about citizens wanting to hold people to account for cratering the economy; or 2) have identified the ‘villains’, but are reticent to name them.

    Seems to me you’re comparing apples to oranges.

  14. rktbrkr says:

    Speaking of the Yun Man, he was asked how the National Association Of Realtors could have possibly overcounted homes sales by one million homes ?

    They inflated the number of home sales for years and got dozens of months of misleading reports, now they adjust the numbers down (during Christmas distraction season) to create a favorable basis for comparison going forward.

    Headline : HOME SALES UNEXPECTEDLY RISE. “December 2011 existing home sales better than expected”. Home sales unexpectedly increased compared to year ago sales blahblahblah. Last sentence “Home sales for the years 2002 through 2010 were adjusted to reflect increasing use of REALTORS in residential transactions” and fewer direct sales by homeowners resulting in a net reduction of recorded transactions.”

  15. The new census revealed FSBOs fell from 19% of national sales to 9%, thus spurring the adjustment. There are no conspiracy theories here…

  16. JasonPappas says:

    Only back to 2003 levels? That was clearly bubble territory. Look at the graph! Remember what the Fed was doing in 2003? It was flooding the market with credit! Mortgage rates hit lows! This market has a ways to fall.

    From the graph it looks like it is stable but let’s remember several things. One third of all homes are bought with FHA loans–that 3.5% down. With prices falling close to 4% a year, it only takes one year for housing to be underwater. Let’s remember that the Fed is holding mortgage rates down. They just won’t let the air out of the bubble.

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