Which Markets Are Leading the Recovery?

Using information compiled in December, Standard & Poors released its Case-Shiller Index on Tuesday.  The report shows home prices down just 2.5% on an annual basis, a figure much lower than the 8.7% annual drop reported after Q3.

According to Case-Shiller representatives, the housing market is “in better shape than it was this time last year”, but some of the summer’s momentum has been lost. 15 of 20 tracked markets declined in value between November and December 2009.

Meanwhile, it’s interesting to note the 5 markets that didn’t decline — Detroit, Los Angeles, Las Vegas, Phoenix and San Diego.  Each of these metro regions were among the hardest hit nationwide when home prices first broke.  Now, they’re leading the pack in price recovery.

Yay, for them! (Seriously, not sarcastically.)

Case-Shiller Index Still Has It’s Flaws

For some real estate investors, that’s a positive signal.  But we also have to consider the Case-Shiller flaws because they’re big ones.

As examples:

1. Case-Shiller data is reported on a 2-month lag
2. The Case-Shiller sample set includes just 20 U.S. cities
3. There’s no “national real estate market” — real estate is local

That said, the Case-Shiller Index is still important. As the most widely-used private sector housing index, Case-Shiller helps to identify broader housing trends and many people believe housing is a key element in the economic recovery.

If the markets that led the housing decline will lead the housing resurgence, December’s data shows that full recovery is right around the corner.

If you’re in a position where you’re considering purchasing a home, and need a recommendation of a good Realtor, I’d be happy to help.  Being in the mortgage business, I know who the “good guys/gals” are.  Feel free to contact me.  All of my information is all over this site 🙂

Tagged as: Case-Shiller Index, Home Prices