Local Home Prices Go Back to the Future
With the caveat that a city-wide price index blends neighborhood valleys and peaks into averages, what does the Case-Shiller index say about Minneapolis home prices since 2000?
Home prices as of Summer, 2014 are about where they were in 2008.
And 2003.
Huh?!?
Price Roller Coaster
The explanation is that the graph for Minneapolis home prices over the last 15 or so years looks like a roller coaster.
First, there was the long climb to the 2006 peak.
Then, there was the precipitous drop to the “double-bottom” — first, in 2009, and again in 2011 (following the expiration of tax incentives for first-time home Buyers).
Since then, Minneapolis home prices have once again been steadily climbing.
While home prices have now retraced most of the post-2006 drop, they are still about 20% below the peak, over all.
That puts prices about where they were on either side of the price climb that plateaued in 2005-2006, then declined with accelerating momentum beginning in 2008.
See also, “Why Case-Shiller Overstate Housing Appreciation in an Improving Market“; “Twin Cities Housing Market Statistics: One Size Doesn’t Fit All”; “The Case Against Case-Shiller“; and “Case-Shiller Misconceptions.”
P.S.: I handled a sale last year in North Minneapolis where, unfortunately, the home fetched about what the Seller paid . . . in 1999.
