Friday, January 9, 2009

Case-Shiller Eh!

A popular home price index that has become quite popular of late is the Case-Shiller index. There are many variations, but the basic premise is you take the home price as of the first quarter of 2000, and give that price a value of 100. Then as prices fluctuate, they will be given values relative to that. So, for example, if the price as of January 2000 was $200,000... $200,000 = 100, $250,000 = 125, $300,000 = 150, $400,000 = 200, so on and so forth.

As this has become a very popular in the US of late, and I hadn't seen it done for Canadian cities, I decided to take a shot, collected data (average MLS residential resale price, or average SFH resale price in Vancouver's case) on eight of our larger centres and compiled it into an index based loosely on Case-Shiller, and here are the results... you can click on the picture for a larger image to get a better look...

Case-Shiller Index Eh!
All figures are through November '08. You can see that by this measure, Edmonton actually had the biggest run up of prices in the country (though, apparently Saskatoon may have out did them, I could not find complete data for Saskatoon, so they are not included), and peaked earliest.

I was a bit surprised to see Vancouver was toward the middle of the pack, and Toronto actually had the most gradual growth of any. With all the verbiage flying around about those two markets, I would have expected them higher up. That's not to say there wasn't a big run up in Vancouver, just it was not as extreme as places like Edmonton, Regina, or even Calgary.

Montreal, Ottawa and Toronto all seemed to have more consistent numbers. Winnipeg saw a bit of a bubble in '07, then a bigger one in '08, but fortunately for recent buyers in that city they were a bit late arriving, so when the economic troubles hit, their fall doesn't look to be nearly as bad as what's likely to hit Regina, who experienced explosive price increases that rocketed them from the bottom of the chart in early '07, to second from the top in 12 months.

With even the cities with more moderate figures experiencing very significant declines in their own prices, it should really put a scare into recent buyers in markets such as Edmonton and Regina, where prices exploded.

Here are the peak values each city realized:

Edmonton = 292.98
Regina = 277.17
Calgary = 253.98
Vancouver = 239.60
Winnipeg = 232.08
Montreal = 207.74
Ottawa = 192.47
Toronto = 173.52

In the days to come I'll also take a look at the respective declines from peak, as well as comparing these results with those in the U.S... the similarities are really quite striking.