The good news is the Housing report from Case-Shiller is pretty good:
S&P CORELOGIC CASE-SHILLER INDEX REPORTS:
10.4% ANNUAL HOME PRICE GAIN TO END 2020
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 10.4% annual gain in December, up from 9.5% in the previous month. The 10-City Composite annual increase came in at 9.8%, up from 8.9% in the previous month. The 20-City Composite posted a 10.1% year-over-year gain, up from 9.2% in the previous month.
Phoenix, Seattle, and San Diego continued to report the highest year-over-year gains among the 19 cities (excluding Detroit) in December. Phoenix led the way with a 14.4% year-over-year price increase,
followed by Seattle with a 13.6% increase and San Diego with a 13.0% increase. Eighteen of the 19 cities reported higher price increases in the year ending December 2020 versus the year ending
However, looking at the rest of the data?
Before seasonal adjustment, the U.S. National Index posted a 0.9% month-over-month increase, while the 10-City and 20-City Composites both posted increases of 0.9% and 0.8% respectively in December. After seasonal adjustment, the U.S. National Index posted a month-over-month increase of 1.3%, while the 10-City and 20-City Composites both posted increases of 1.2% and 1.3% respectively. In December, 18 cities (excluding Detroit) reported increases before seasonal adjustment, while all 19 cities reported increases after seasonal adjustment.
“Home prices finished 2020 with double-digit gains, as the National Composite Index rose by 10.4% compared to year-ago levels,” says Craig J. Lazzara, Managing Director and Global Head of Index
Investment Strategy at S&P DJI. “The trend of accelerating prices that began in June 2020 has now reached its seventh month and is also reflected in the 10- and 20-City Composites (up 9.8% and 10.1%, respectively). The market’s strength continues to be broadly-based: 18 of the 19 cities for which we have December data rose, and 18 cities gained more in the 12 months ended in December than they had gained in the 12 months ended in November.”
To be sure, we’re not too keen on the “seasonally adjusted 1.3% monthly gain” number, preferring the 0.9% unadjusted. We’re very untrusting of adjustments.
There’s one other aspect, too: Look at the Housing price change, Year-on-Year:
Urban’s Bottom Line
We have no quarrel with the Case-Shiller report and the 10.4% gain in home prices in the most recent calendar year.
However when taken in context of a cratering economy (almost 10-million fewer people are working compared with year-ago levels), and even the annual seasonally adjusted H.6 Fed Money stocks report for M2 is up in the same period 25.8%, Ure’s Housing Axiom is proven again.
It holds there are only two ways to own property:
- One option is to put minimum down, say 10% if you could. In this way, on a half-million dollar home, you would have $50,000 of money “at work” while a 10.4% increase in Housing prices would increase the home price enough to actually “make money” on the home even if H.6 inflation is high.
- The other option is to own outright, but then you’ve got a very illiquid asset. This works well when you don’t depend on location-based economic activity. The Bay Area, for example, is still “hot” but the Detroit real estate bubble popped long-ago.
It’s best to own a home, no doubt. But how much depends on your confidence level and outlook on forward prices…
Write when you get rich,