In late February, I made some predictions on housing prices in five cities. I predicted that home prices in these five cities would continue to fall based on an assumption that property values would go back to their long-term trend using the S&P Case Shiller index. The starting values were those reported for December of 2007. Here are those predictions:
Miami – 32% drop
Los Angeles – 31%
Tampa, FL – 28%
Las Vegas – 28%
Washington – 24%
Here are the numbers today:
Miami – 21% drop
Los Angeles – 19%
Tampa, FL – 13%
Las Vegas – 23%
Washington – 11%
Conclusion: While prices in many markets are continuing to fall, Washington and Tampa will not reach the depth that I projected unless something else happens. The month-to-month numbers for those two cities show that prices have leveled out and are at or near their bottom. Miami and Los Angeles may approach my prediction. Las Vegas will almost assuredly meet my prediction as prices there are continuing to fall by 2+% per month with little indication that this rate will change soon.
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2 comments:
I am curious why you chose December 2007 for your starting values. I would think that the values were highly inflated even at that time.
I chose December 2007 simply because it was the most recent data at the time. Home prices had already started to fall by that point in a number of housing markets. I was predicting that they were going to continue to fall from that point.
My long term trend started as far back as was available.
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