Recording the Rise

By Dave Fratello | March 28th, 2013

In MBC's early days, we often needed to bring in references to the Case-Shiller house price index to describe what was going on elsewhere. We would then check in to see if it rhymed with what was happening in Manhattan Beach real estate.

Now, it's been about 4 years since we made a substantial reference to Case-Shiller, but it looks like time again.

We mentioned the index it in a Sept. 2009 post with Ben Bernanke's declaration that the housing-led economic recession was "very likely over" (was it?), with Case-Shiller indicating at around that time that a "bottom" was forming in housing markets broadly. (See our posts, "Very Likely Over" and "MB vs. CA & U.S. Trends," July 2009.)

Looking back, Case-Shiller's data properly "rhymed with" the course of events in the Manhattan Beach market, at least. Most pros now cite Q3 2009 as the end of the slide and the beginning of a recovery in our local home sales and prices. (Some were saying it in the middle of Q3 2009 – we took a "trust but verify" type attitude, waiting to see if it was really in, but you gotta respect those who called it.)

Now we look forward.

Case-Shiller is documenting a drastic rise in home prices in many of their city-by-city indices.

Year-over-year comparisons (January 2012/January 2013):

  • Phoenix: +23%
  • San Francisco: +17.5%
  • Las Vegas: +15.3%
  • Detroit: +13.8%
  • Atlanta: +13.4%
  • Los Angeles: +12.1%
  • Miami: +10.8%
  • San Diego: +9.8%

The overall "20-city composite" was up 8.1% year over year.

Now, last we checked, Phoenix and Las Vegas were foreclosure-ridden wastelands and Detroit was groaning under the weight of umpteen-billion-dollars in debt, probably best off if absorbed into Windsor.

Did these places suddenly turn awesome when we weren't looking? What's with the heavy double-digit price increases?

Miami, that's another hard-hit market where the pop of the bubble revealed how horribly out of whack fundamentals had gotten. Much of Florida is still underwater, housing-wise. (Not to mention the climate change risks.) But Miami's up almost 11%.

LA, SF, San Diego – we can understand price recoveries in those regions to an extent, even, grudgingly, Atlanta.

But we're not going to argue with the Case-Shiller folks. Something is afoot. Something is inflating.

You can question January data, sure. The months of November-February tend to have the lowest sales volumes and could be subject, therefore, to the widest error ranges. If it were anyone but Case-Shiller putting out these numbers, we'd open up the salt shaker and take a little on one finger.

Over at Forbes online, they cite this recent report to say "Home Prices Growing As Fast As Before The Housing Collapse."

Calculated Risk summarizes some forecasters' recent upward revisions to their home price projections for 2013 in this post.

The LA Times article reviewing the new Case-Shiller data features some debate over whether the price increases are real or sustainable.

What about here, now?

We can all agree that things like median price movement don't capture much of what's going on in Manhattan Beach. But it's part of the story.

In a Sept. 2012 post summarizing YTD medians, we reported that MB (citywide) was up 4% at the time year-over-year, and then opined:

We still hear the occasional reference to how MB is up 10%, 15% or more this year.

That's hype. The type that comes out of the well-known, widely discussed imbalance between supply and demand here, the return of the bidding war, and the seemingly endless supply of "all-cash" buyers jumping into MB real estate.

Those are signs of a seller's market, but not pure madness. 

That's what we said then. Hold your thoughts. 

Citywide, MB wound up 2012 with a flat year-over-year median price comparison. (See "2012 Wrap: More Sales, Tiny Median Bump.") West of Sepulveda, SFRs were up just 1.5% year-over-year. (See "2012 Sales & Medians West of Sepulveda.")

Today, here in March 2013, it's very clear that median prices and comps have been deemed irrelevant in some deals. 

Last September, we said the market was "not pure madness," but with some of the head-smacker deals coming out these days, we can't say the same now.

If you hate double negatives, what we're saying is that there is some madness out there now.

You still can't really pull enough data to say MB is up by a specific % from one time to the next – the data are not going to tell the story you're looking for. We're reduced to anecdotes, word on the street, dropping jaws, and all that.

Heck, if Detroit can be up 13%, why not MB?

We're in a rising market. The data are starting to show that everywhere. What's next – that will be interesting.

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