Wednesday, August 26, 2009


Maybe now we can say that housing has bottomed?

After three years of disastrous data, 19 of the 20 markets tracked by Case-Shiller improved last month - the fifth straight month of strong data and the index's strongest showing in 3-plus years.

Leading the charge? Dallas and Denver, which each have reported four consecutive months of positive returns. Prices in Denver showed a 1.3% increase in May, followed by an even stronger 2.5% increase in June.

Since Case-Shiller only tracks resales of existing homes, "sold" data is the only thing that counts.

And since higher end homes simply are not selling, it's important to keep in mind that what Case-Shiller is really telling us is that the homes that are actually selling (lower end homes) are increasing in value.

Remember that homes priced below $250,000 currently account for just 28% of all listings in the Denver Metro market, but 61% of sales activity. Conversely, homes above $600,000 account for 25% of all listings, but just 4% of all sales.

So the vast majority of the sales activity being tracked by Case-Shiller is at the low end of the market... therefore, when Case-Shiller says values are increasing, please understand that it's the bottom of the market that is driving the good news.

When you consider what a drag the high end of the market is on the overall numbers, the reality is that homes below $200,000 are appreciating at rates that are significantly higher than what Case-Shiller is reporting.