Case-Shiller Agrees with CHR on Home Price Appreciation

Mike Cooke June 20, 2018 Buying Selling


We’ve heard it several times in the last two days so maybe you’ve heard it too: The Case-Shiller Home Price Index put out by Standards & Poor/Core-Logic shows home prices are up 6.4% nationwide compared to one year ago.

You may not have heard that this is the 72ndmonth in a row that the index has been positive.

According to Case-Shiller, Seattle, Las Vegas and San Francisco have experienced double digit increases of 13.1%, 12.7% and 10.9%, respectively. Denver comes in fourth on the list with an average home price appreciation of 8.6% over the last year.

All of these numbers are as of the end of April this year. The Case-Shiller index always lags the market by a couple months. Also, the Case-Shiller Index only uses single family homes in its calculations – no townhomes or condos are used.

What is the Case-Shiller Home Price Index and why is it cited so often in news reports?

Karl Case and Robert Shiller are a couple of wonky economist types with PhDs from Harvard and MIT. They came up with a different approach to evaluating home price appreciation. While most measures of appreciation are a simple average based on all homes sold in a particular time frame compared to some pervious time period (a month ago, a year ago), Case-Shiller uses a “paired-sales” methodology.

In the paired-sales approach, the price of a home that sells in a given month is compared to the price that same home brought the last time it sold, regardless of whether that was two years ago or eighteen years ago.

The raw data are run through some black box algorithms (fancy PhD-speak for a “set of rules”) that perform quality control checks to see if a given home should be excluded from the overall data set. The valid data points are used to come up with an average increase or decrease in home prices over a specific time frame.

Some claim that this paired-sales approach provides a more accurate measure of movement of home prices.

Since this particular Case-Shiller analysis is done by S&P and Core-Logic, giants in the financial and big data markets, it gets a lot of attention by media outlets.

While we don’t have PhDs here at CHR, we do have really smart people that use a number of methods to track home price trends each month. We download data and run it through our own algorithms and come up with appreciation rates.

The results:

Single family home prices in metro Denver are up 8.39% based on the CHR methodology. You could say there is good agreement between CHR and the Case-Shiller number at 8.6%. Or, you could say that CHR has conclusive evidence that the Case-Shiller analysis is off by 0.21%!

All kidding aside, we like having multiple methods of evaluating home price trends. When they agree, we can have higher confidence that we are seeing the true trends.

By the way, our analysis comes out around 10days after the close of a given month. We had our April analysis done by May 10th– 45 days in advance of Case-Shiller result.

Unlike Case-Shiller, we do track the multi-family market also. Townhomes and condos have gone up by 11.04% as of this April compared to April of 2017.

Combine all residential homes, both single family and multi-family, and the average price appreciation was 8.75% this April compared to April a year ago.

You can see more stats about the single family and multi-family home markets in metro Denver in the one-page reports at the end of this blog post.

Would you like to see more specific stats on your little corner of the metro Denver area? Call your CHR agent. He or she can give you details down to zip code level as well as down to the level of your specific neighborhood in many cases.

Single Family Home Market Trends

Multi-Family Homes Market Trends