If you take the headline of this AP story, via the Trib, at face value the S&P Case-Shiller Index for April has us in the “17th month of decline in home prices.” It couldn’t be more wrong.
The Case-Shiller Index, if the AP reporter had the time or the ability to understand it, tracks rates of return on housing relative to other investments, and not simply home prices. And, it’s critical to note, the 10-city Index primarily measures returns in highly volatile coastal and sunbelt metro areas.
Read the data and news release directly at Standard & Poor’s for a more accurate picture of what’s going on. You’ll learn there that the Index for Chicago is slightly higher on a year-over-year basis. Housing returns in Seattle, to take one example, declined from a 17.8% annual rate in April of last year to a 9.6% rate of return in April of this year. An alarming decline, or a healthy rate of return?