Case Shiller: DC Area Home Prices Rise 3.6%

• March 29, 2011
• 14 Comments

by UrbanTurf Staff

Continuing the trend of outpacing the rest of the country, the DC area posted a 3.6 percent year-over-year increase in home prices between January 2010 and January 2011, according to the latest Case-Shiller report released this morning. Nationally, home prices in the 20-city index decreased 3.1 percent during that period. Economists predicted that prices would fall 3.3 percent in January, after a 2.4 percent drop in December.

Case Shiller January 2011

The DC area market was one of only two metropolitan markets (the other being San Diego) that showed a year-over-year increase.

From the report:

Only San Diego and Washington D.C. posted positive annual growth rates in January 2011. These are the only two cities whose annual rates remained positive throughout 2010.

Prices increased ever so slightly (0.1 percent) in the DC area between December 2010 and January 2011. That increase is small, but it represented an increase in each home price tier measured by Case Shiller: lower (under $293,756), middle (between $293,756 and $457,827) and high (above $457,827).

Washington DC appears to be the only market that has weathered the recent storm. While it was up only 0.1% for the month of January, it’s annual rate was a relatively healthy +3.6%, it is still +10.7% above its March 2009 low, and ranks number one among the 20 markets as its average value is almost 85% above its January 2000 level.

Positive news for the DC area notwithstanding, this morning’s report offered a bleak assessment of the overall national market, noting that evidence of a double-dip housing recession is mounting:

The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery. At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing.

This article originally published at http://dc.urbanturf.com/articles/blog/case_shiller_dc_home_prices_rise_3_6/3238

14 Comments

1. Just Saying said at 4:05 pm on Tuesday March 29, 2011:
   I just wanted to point out that positive news is all in the eye of the beholder. It's good news for DC homeowners that property values have remained high, but for those who do not own property, it means that high prices continue to shut us out of the market. I get frusterated when coverage (throughout the nation) always seems to construe higher real estate prices as a good thing. An entire generation of young professionals are currently either (1) getting shut out of the real estate market for starter homes or (2) spending a disproportionate amount of their income on housing.

1. DC 416 said at 4:40 pm on Tuesday March 29, 2011:
   In response to "just saying" I would like to know what neighborhood's you are using for your justification? If it is Logan or Dupont Circle then yes, you have to have a sizeable income to afford these very desireable areas. Although I live in an amazing new construction located in LeDroit that recently sold the last 1 bedroom for $179k w/ parking. I also toured another new build just off of H St that had large 1 Bed condo's at $139k and 2 Bed's at 205k. TO make a blanket statement that yound professionals are being shut out of the market, is inaccurate in my opinion. You have to be creative with your search, there are very affordable new & resale options out there, you just have to know where to look.

1. Z said at 5:34 pm on Tuesday March 29, 2011:
   Yes, I agree with DC416. As young professionals, we need to find a starter place. Once we lock in interest rates we don't have to worry about inflation or higher prices. As we build up equity, we can then save to trade up to a dream property or at least something that meets our needs in the next stage of life. Waiting outside the market until we can afford to buy that dream property means our rent will keep going up and the dream just gets further away. We can't expect to have what older professionals when we're just starting out in our careers.

1. Rob said at 5:49 pm on Tuesday March 29, 2011:
   The key point that Just Saying was making is that media stories about house prices always treat higher house prices as a good thing, which isn't true for everyone (or even most people). Higher house prices are good if you own a house and might want to sell it. Higher house prices are bad if you don't own a house, but might want to buy one. And if you're not buying or selling, then house prices don't directly matter to you.

1. Hmm said at 5:55 pm on Tuesday March 29, 2011:
   High home prices may not directly matter to those not looking to buy or sell and may seem to be bad news for those looking to buy, but when looking at the bigger picture, they are really positive to everyone because they are indicative of a strong overall economy. I'm not sure why that concept seems to have failed some people here.

1. Mike said at 5:58 pm on Tuesday March 29, 2011:
   True people are shut out but if you are 25 and feel shutout because the place you want costs $700K, is across the street from your favorite bar and have student loans then you need to re-prioritize and buy a cheaper place (or rent) a bit further away (but w/in the beltway) and build some equity, pay down the debt and maybe when you are 30-35 you can afford that $750K place (assuming small increases). Its not a lecture but rather probably reality. I didn't buy my first place until I was 36 and then again at 38 - it can take a while to save up for a downpayment and then still have money in the paycheck for a mortgage payment.

1. Rob said at 6:07 pm on Tuesday March 29, 2011:
   @Hmm: There are many vastly better ways to measure the health of the economy than looking at house prices. I'm not sure why that concept seems to have failed you. 😃

1. Just Saying said at 6:29 pm on Tuesday March 29, 2011:
   Well, at least Rob understood the comment. The comment is as simple as this. Case-Shiller said that DC homep prices rose. Urban Turf staff called this information "[p]ositive news for the DC area." I responded that yes, it's positive news for DC area residents who currently own a home, but likely not for DC residents who do not own a home, nor for those who move to DC and are looking to buy a home. It's that simple. It has nothing to do with neighborhoods or specific houses. Here is an instructive, if dated, chart from Robert Shiller: http://www.businessinsider.com/the-housing-chart-thats-worth-1000-words-2009-2

1. Bizarre said at 9:45 pm on Tuesday March 29, 2011:
   I find DC416's comments fascinating. It is based on the belief that home ownership is necessary and therefore you should buy at any time, anywhere you can afford anything, even if it is a condominuim in a less undesirable neighborhood. How buying for the sake of buying makes sense, I have no idea and I wonder what the plan is when, not if, DC's market correction comes. And despite claims to the contrary, that day is definitely going to come. I on the other hand will stay in my sub-optimal apartment in a good location, continue to save my money and wait it out. For those of you interested, the NYT rent v. buy calculator is a good tool to assess whether buying is the right choice. http://www.nytimes.com/interactive/business/buy-rent-calculator.html

1. anon said at 11:26 pm on Tuesday March 29, 2011:
   That correction would only come if in fact disequilibrium exists between the cost of renting vs. cost of ownership. The barriers to ownership have increased with lenders requiring more money up front and stronger eligibility requirements overall. That puts upward pressure on the rental market, which in turn props up prices as the cost of ownership is more in line with the cost of renting. That correction only comes when the cost of ownership is much higher than the cost of renting. Most people overlook the real costs of ownership (including maintenance and depreciation), which is why those calculators, even the one provided by NYT, are not very telling. Most people also overlook their savings rate and the value of money invested in a house vis a vis other investment vehicles. Jack Guttentag, a Wharton based expert, has better tools for making these calculations www.mtgprofessor.com

1. Redline SOS said at 12:35 pm on Wednesday March 30, 2011:
   At some point federal employees will be completely priced out of the market. And it's awfully close to that point now. Congress needs to require DC to set aside housing for federal workers.

1. H Street Landlord said at 4:21 pm on Wednesday March 30, 2011:
   What does that mean, "completely priced out of the market"? You can't afford a home in Anacostia, Trinidad, Petworth etc on a federal salary?

1. Hmm... said at 10:58 pm on Wednesday March 30, 2011:
   Ha ha. Nice try Rob, but nope, that concept hasn't failed me! Please point out in my comment where I stated that looking at housing prices is the best way to look at the strength of the economy.

1. JT said at 4:43 pm on Thursday March 31, 2011:
   @ Redline SOS - Congress needs to set aside housing for federal workers? Are you kidding? You're saying that taxpayers should start paying for housing for people who choose to work for the federal government (in effect the only way this would be feasible). Assuming you work for the fed govt, who is holding a gun to your head saying you have to be a federal employee? If you don't like how much money you make...GO GET A BETTER JOB!