#composite 20

Good news for real estate value, but bad news for buyers? If you are going to buy a house in the city, do it before next Tuesday because prices may increase. The Case-Shiller Home Price Index: Composite 20 is set to report next Tuesday, June 26th. The index compiles a list of the value of residential real estate in 20 major U.S. cities. Actuals are given with a two-month delay, so this report reflects April 2018. The Estimize graph utilizes the year-over-year percentage (YoY%) and compares the incoming report with the same one in the previous year. That being said, Estimize predicts that April 2018 will see an increase of 6.6% over the previous year. In recent months, actuals have been higher than Estimize predictions, so the increase may be even greater than 6.6%.

This indicates a strong performance from metropolitan real estate markets that were devastated from the Great Recession of the late 2000s. Furthermore, the strong performance of city real estate indicates a more valuable housing market in general, as the Composite 20 makes up a significant portion of the total housing market. Moreover, as the housing market makes up around 15-18% of the entire US’s GDP (1), the success of the composite indicates a stronger US economy in general. However, because the value of housing is forecasted to increase, prices may soon follow—with an increase in value also leading to an increase in home costs. On top of that, the supply of housing is not meeting the demand. MarketWatch says, “As supply dwindles, prices surge. In May, the median sales price for an existing home was $264,800, a 4.9% annual increase.” (2) So if you are going to buy a house, do it soon—it’s not worth the wait.

What do you think about the value of housing? Estimate here.

Photo credit: Spencer Means

1: “Housing's Contribution to Gross Domestic Product (GDP).” NAHB, National Home Association of Builders, 2018, www.nahb.org/en/research/housing-economics/housings-economic-impact/housings-contribution-to-gross-domestic-product-gdp.aspx.