Two recent reports discussed encouraging news about home values in the United States:
Strength in home prices and in the stock market reinforce the “wealth effect” that leads to more spending, which in turn boosts the general economy. The US and the world need the growth in demand.
How do home values in Austin and Central Texas compare? One tool is S&P’s Case-Shiller Price Index, which has tracked 10 cities for more than 25 years, then expanded to a 20-city index in 2000. Austin is not a “Case-Shiller” city, but I routinely follow sale prices here, and the 12-month rolling average allows a fair comparison to those large indices:
Notice that all three curves were “zeroed” at January 1, 2000, so differences in the way the last market cycle and the housing downturn were experienced are quite visible. As of March 2013, accumulated price appreciation in the Austin metropolitan area almost exactly matched the Case-Shiller 10-city price index, and exceeded growth of the 20-city index. The obvious difference was the bubble that burst in 2006, and the much-discussed damage done in the process.
The Case-Shiller indices will be updated for again later this month, but major data provider CoreLogic reports that April home prices in April 2013 were up 12.1% compared to April 2012, and 3.2% over March 2013. The corresponding figures for the Austin/Central Texas market were 14.5% year-over-year and 9.8% March-to-April. Here is how Austin-area prices behaved through the most recent market cycle and the recovery, which began here long before most Case-Shiller cities:
Click that chart to enlarge it, and you’ll see that the Austin area has seen 23 months of annual price gains. Note, too, that the worst year-to-year price declines here were in the 8% range. Compare those to the non-stop slide from 2006 to 2009 in the Case-Shiller cities.
Another bubble forming? So far that doesn’t appear to be the case. In Austin and Central Texas particularly, underlying economic and employment growth are tremendous, and with a more stable national economy there is good reason for optimism.