Southern California House Prices Continue to Defy Gravity

June 30, 2021 Updated: July 2, 2021

Commentary

Home price values accelerated across the nation in April, according to the most recent data from the S&P CoreLogic Case-Schiller home price indices. The rise was especially sharp in the western U.S.

Using January 2020 as the starting point, home prices increased by more than 25 percent in both San Diego and Seattle through the 16-month period ending April 30.

During that time, home values rose 27.8 percent in Seattle and 25.9 percent in San Diego.

San Diego had the advantage of more prospective homebuyers looking to move to the suburbs, and Phoenix benefited from people moving from California and colder parts of the Midwest and northeast. About 260,000 people moved out of California last year, according to data recently presented by Chapman University economists.

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Home prices were up 22.1 percent in Phoenix during the 16 months from January 2020 to April 2021, and up 19 percent in San Francisco and 17.4 percent in Los Angeles.

“April’s performance was truly extraordinary,” said Craig J. Lazzara, managing director and global head of index investment strategy at S&P DJI. “The 14.6 percent gain in the National Composite is literally the highest reading in more than 30 years of S&P CoreLogic Case-Shiller data. Housing prices in all 20 cities rose; price gains in all 20 cities accelerated.”

Analyzing possible reasons for the price surge, he said, “We have previously suggested that the strength in the U.S. housing market is being driven in part by reaction to the COVID pandemic, as potential buyers move from urban apartments to suburban homes.

“April’s data continue to be consistent with this hypothesis. This demand surge may simply represent an acceleration of purchases that would have occurred anyway over the next several years. Alternatively, there may have been a secular change in locational preferences, leading to a permanent shift in the demand curve for housing. More time and data will be required to analyze this question.”

The S&P CoreLogic Case-Schiller real estate data is among the best data available for home prices. It uses price data from actual transactions and compares those transactions to the last time of sale.

S&P’s main line of business is credit analysis, but it’s well known for its indices including the S&P 500 stock market index. CoreLogic, among other things, provides real estate data services. And Robert Schiller won his Nobel Prize in Economic Sciences for his work suggesting how best to analyze markets, which methods are used by the S&P CoreLogic Case-Schiller home price indices.

Tim Shaler is a professional investor and economist based in Southern California. He is a regular columnist for The Epoch Times, where he exclusively provides some of his original economic analysis.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

Tim Shaler
Tim Shaler
Tim Shaler is a professional investor and economist based in Southern California. He is a regular columnist for The Epoch Times, where he exclusively provides some of his original economic analysis.