Four strong months in a row – at this pace, our local Case-Shiller Index will rise about 10%-12% this year! This is the non-seasonally-adjusted index below. The seasonally-adjusted was slightly higher at 237.79.
David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, said the April increase in prices shows demand for homes is rising but the supply of homes has hardly kept up.
“The question is not if home prices can climb without any limit; they can’t,” Blitzer said in a statement. “Rather, will home price gains gently slow or will they crash and take the economy down with them? For the moment, conditions appear favorable for avoiding a crash.”
San Diego Non-Seasonally-Adjusted CSI changes:
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The highest reading of the San Diego NSA CSI was 250.34 in November, 2005.
The most-recent low point was 144.43 in April, 2009.
“As home prices continue rising faster than inflation, two questions are being asked: why? And, could this be a bubble?” says David M. Blitzer Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Since demand is exceeding supply and financing is available, there is nothing right now to keep prices from going up. The increase in real, or inflation-adjusted, home prices in the last three years shows that demand is rising. At the same time, the supply of homes for sale has barely kept pace with demand and the inventory of new or existing homes for sale shrunk down to only a four- month supply. Adding to price pressures, mortgage rates remain close to 4 percent and affordability is not a significant issue.
“The question is not if home prices can climb without any limit; they can’t. Rather, will home price gains gently slow or will they crash and take the economy down with them? For the moment, conditions appear favorable for avoiding a crash. Housing starts are trending higher and rising prices may encourage some homeowners to sell. Moreover, mortgage default rates are low and household debt levels are manageable. Total mortgage debt outstanding is $14.4 trillion, about $400 billion below the record set in 2008. Any increase in mortgage interest rates would dampen demand. Household finances should be able to weather a fairly large price drop.”
affordability is not a significant issue.
This is how rich people think.