What is the Case-Shiller Index that we keep hearing about in the news? What does it mean to me here is Southern Indiana?
Well, first of all, it is really named the S&P/Case-Shiller Index, and there are actually 3 separate indexes. There is the S&P/Case-Shiller 20 City, the S&P/Case-Shiller 10 City, and the S&P/Case-Shiller National Index.The S&P/Case-Shiller U.S. National Home Price Index (“the U.S. national index”) tracks the value of single-family housing within the United States. The index is a composite of single-family home price indices for the nine U.S. Census divisions and is calculated quarterly.
The 10 and 20 City indexes are made from the following cities: Washington, DC, Detroit, Minneapolis, Cleveland, San Diego, San Francisco, Denver, Chicago, Boston, Charlotte, Portland, Phoenix, Los Angeles, Dallas, Miami, Tampa, Atlanta, Las Vegas, New York, and Seattle. While the different indexes are made up of entirely different groups, and the actual values are much different, the percentage changes in the different indexes are almost identical.
So here is what all three indexes tell us. The home prices high point was around June 2006, and the low point was March 2012. For almost 6 years, home prices declined and they declined from high to low by 35%. For the last year home prices have risen, however they have risen from their lows in March 2012, they are up by ~ 14%. Unfortunately, that is still down 21% from the highs of 2006.
In many ways, our local market does reflect the decline in prices that the index is reporting, not always, but in a number of cases. Short sales and foreclosures have driven the prices down in some areas, while other areas have remained less susceptible to the downward pressure. The only sure way to see what is occurring in your area is to have a Comparative Marketing Analysis done on your property. In many cases, it may not be important what the buyer and sellers are willing to accept or pay, but it has become what risk the appraisers and lenders are willing to assume.