S&P/Case-Shiller released its November 2012 Home Price Index this morning. Home prices in the 20-City Composite, which includes Portland, rose 5.5% in the twelve months ending in November 2012. Portland rose 6.7% over the same twelve months.
Two overlooked points:
- Whereas the November to November numbers are strong, more impressive is the change from the low point. Portland home prices were 10.2% higher in November 2012 than eight months earlier in March 2012.
- We have opined for some time to friends and clients that we thought the Portland market was excessively discounted. Put bluntly, houses were just too cheap. The recent appreciation is more of a “correction.” So is there more correction left? We think so. Assuming a historical growth rate in home prices of 4.0%*, Portland and U.S. home prices are still 15% below the long term trend line.
Many factors affect the housing market. We’ll review 2012 and forecast 2013 in the days ahead.
*Robert Shiller, co-creator of the CS Index, charted in Irrational Exuberance (titled after the famous term coined by former Fed Chairman Alan Greenspan) the growth of U.S. home prices since 1890 at a little under 4% per year. Other sources have supported that conclusion.