Comparing Case/Shiller national numbers to Dallas.

The updated CASH-SHILLER Web site is terrific and displays just about any data point you can imagine for the S&P / CASH-SHILLER Home Prices. So if your work is remotely related to the housing / mortgage markets, then you need to dig into the new site.

Comparing three data points: 1). National averages. 2). 10 – City composite. 3). Dallas area.

The first chart shows the S&P/CASH-SHILLER National home price index numbers going back to 1987. The data is compiled monthly and uses a three month moving average with levels published with a two month lag. Look at the acceleration in price levels from 2000 to the peak in June of 2006. The Index rises from 98 to approximately 189. That’s almost a 50% rise for the Index. The charts clearly shows the peak lasting from 2005 to 2007 then falls hard to 2009 and hits the low point (based on this data to date) in March of 2012 with the index low of  124.01. This drop is approximately a 52% move from the highs for this index. We won’t go over why, this is nothing new. Let’s look at a 10-City sampling of the index and compare it to the National Averages. The two charts are identical.

Case/Shiller Index .National

Case/Shiller Index .National

Look at the 10-City sample chart- almost a mirror image of the National data.

Case/Shiller 10-City sample

Case/Shiller 10-City sample

The last thing we will look at is the Dallas area. If you’re like me and lived in the DFW area from 2000, you would have noticed a similar rise in home pries but one thing was obvious was that the Dallas area home price increases were below the national averages. As the building and home price booms exploded throughout the rest of the country, we all noticed our homes increasing in price but not nearly as much, or as quickly, as major cities like Manhattan, Miami, and Phoenix. Much of California, Seattle and Las Vegas also.

For Dallas, the fact is the availability to expand into new areas was the key. Abundant land to the north and west of the city with Ft.Worth taking on a major expansion role in job creation certainly helped to keep home pries stable as families were able to maneuver around the two major cities to transfer from one job to another. Also, the cost of new or existing homes were already below the national average. This kept a “cap” on the aggressive expansion in price increases. Plenty of land, jobs, and cheap labor / building materials helped maintain a stable price increase with only small spikes in prices. The lay of the land and jobs diversification in the DFW area seemed to smooth any dramatic spike in home prices. As the rest of the nation struggled with over-expansion, unstable local job markets, lack of diversification in available jobs, and unqualified new home owners.  The DFW area was able to overcome many of these issues that the rest of the nation experienced. As the nation experienced the ‘bubble’ in home prices and the crash back to reality. Dallas stayed stable when compared to the rest of the country. The Chart of the Dallas area shows this. A flat line with a few spikes in the index but the theme here is stability. Actually, Dallas is one of the few cities that have come back to pre-crash pries levels first. While most of the nation is still well below the 2006-2008 levels, DFW has shown a steady range with a slight uptick in prices the last 12 months. If I sampled Houston and Austin, we would most certainly see the same data.


 Nick Pirraglia

Disclaimer: The material provided is purely for educational purposes only. No information contained herein is a solicitation or offer to buy or sell any securities. The information provided is in no way investment advice from Nick Pirraglia, TradersThinkTank or any other contributed content. The opinions, analysis and commentary on this website are purely the subjective views of the author. Nick Pirraglia is not a Registered Investment Advisor and under no circumstances should any content from this site be used as investment advice, recommendations, or trading advice. Please consult your financial advisor prior to making investment decisions.

About Nickolas Pirraglia

Nick Pirraglia started his career in trading in 1991 after returning to the US as an Army Officer deployed in Iraq. He began as a bond broker and worked his way into trading. Expert mentoring, hard work and a disciplined approach to the markets has allowed Nick the ability to maintain a very successful career in Capital Markets and Trading for over 20 years as a professional OTC Market Maker and independent trader. Nick has also managed the trading desks for a two Dallas based capital management companies and traded equities for a Dallas based hedge fund. Nick has trained and mentored thousands of customers in the rigors of trading, technical analysis and risk controls. Recently, Nick had broadened his market experience through the design and product management of two automated trading platforms. He has the pleasure of working with some of the brightest minds in the trading community and has collaborated with experts in data, design, engineering and trading psychology. An avid long distance runner, Nick completed several marathon events, qualified for the Boston marathon, completed several long distance Triathlons to include finishing a full Ironman triathlon.
This entry was posted in Trader. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s