On a price-to-rent basis, the Case-Shiller National index is back to August 2003 levels, the Composite 20 index is back to June 2003 levels, and the CoreLogic index is back to October 2003.
US Price-to-Rent Ratio
The year- over-year increase in the Case-Shiller National House Price Index is mostly moving sideways, now around 5 per cent. In March, the index was up 5.2 per cent year-over-year.
In the Case-Shiller release, the National Index was reported as being 3 per cent below the bubble peak. However, in real terms, the National index is still about 17 per cent below the bubble peak.
Bill McBride of Calculated Risk Tuesday graphed nominal house prices, but said it is also important to look at prices in real terms (inflation adjusted).
“Case-Shiller, CoreLogic and others report nominal house prices. As an example, if a house price was US$200,000 in January 2000, the price would be close to US$274,000 today adjusted for inflation, or 37 per cent. ‘Real’ prices, adjusted for inflation, are important.
On a price-to-rent basis, the Case-Shiller National index is back to August 2003 levels, the Composite 20 index is back to June 2003 levels, and the CoreLogic index is back to October 2003.
In real terms, and as a price-to-rent ratio, prices are back to late 2003 and early 2004 levels – and the price-to-rent ratio maybe moving a little more side– ways now.