Release of 2020 Zip Code Data

Housing Price Trends recently released the 2020 annual Housing Price Index Percent Change (un-adjusted for inflation) report. As indicated in the report, these data are considered experimental by the FHFA. We recently also added a second report of the same data sorted by the most recent year's change (sorted high to low).

Housing Price Trends Posts 4Q2020 Results

Housing Price Trends has updated the price charts with 4Q2020 Housing Price Index data. For this quarter, there were 25 BUY signals and no SELL signals. There were 9 BUY signals in the top 148 cities in which to invest, and 16 BUY signals other than in the top 148 cities. Remember the BUY signals that occur outside of the top 148 cities are not as meaningful, since those cities have prices that generally go up and down on much smaller amounts.

This is the highest number of BUY signals in the top 148 than we have seen in a few years.

As the end of some government housing assistance programs approaches, and with the uncertainty of future programs, the housing market could be in for some future turmoil. It would be wise not to read too much into the high number of BUY signals, as the unusual economic conditions, job uncertainty and uncertainty in future interest rates all create more than normal pressures on the housing market.

 

 

 

 

The one chart that tells you all you need to know!

If you are not yet convinced that a long-term hold of residential property may not be the best investment, then this chart should convince you. This is the chart of the overall US Housing Price Index, adjusted for inflation. The dashed line is the linear trend line for the chart period. Over a 45 year period, the inflation-adjusted HPI went up 155%, or 3.4% per year. And that's using the "official" CPI data; and we know the Bureau of Labor Statistics constantly adjusts how they calculate the CPI (i.e., to keep it at a low number), so that the 3.4% annual return could actually be 0%.

For that same period the CPI went up 490%, which diminished the 758% increase of the HPI.

Excellent inflation-adjusted returns can be achieved in residential real estate, but you have to know when to BUY, in WHICH market, and when to SELL.

MORE ABOUT CPI:

While the official CPI published by the government is constantly manipulated to keep it low, the real-world CPI is higher. One source does this alternative calculation and comes up with a CPI about 2-3X the official CPI (http://www.shadowstats.com/alternate_data/inflation-charts):

As you can see from this chart, this divergence started around 1980.

Housing Price Trends Posts 3Q2020 Results

Housing Price Trends has updated the price charts with 3Q2020 Housing Price Index data. For this quarter, there were 8 BUY signals and 5 SELL signals. However, only 3 BUY signals (Glens Falls, NY; Atlantic City-Hammonton, NJ; East Stroudsburg, PA) occurred in the top 148 cities in which to invest, and 1 of the 5 SELL signals occurred in the top 148 cities (Odessa, TX). Remember the BUY signals that occur outside of the top 148 cities are not as meaningful, since those cities have prices that generally go up and down on much smaller amounts.

The average inflation-adjusted annual return for the Odessa, TX area was 20.6%. It cannot be stressed enough to evaluate "inflation-adjusted" returns in your investments. There is a significant effect of inflation over time.

If you are a paid subscriber, you will note that Midland, TX has a SELL signal this quarter. If you compare to last quarter, you will also note a SELL signal for 2Q2020. So, what is going on? The FHFA slightly modifies their data collection on occasion. These changes are typically minor, but can affect a signal. In the Midland, TX market, for example, the inflation-adjusted HPI was 1.25% in the 2Q2020 report, and 1.22% in the 3Q2020 report. Following the Housing Price Trend system, you would have sold following the 2Q2020 report, and that would have been correct.

As the end of some government housing assistance programs approaches, and with the uncertainty of future programs, the housing market could be in for some future turmoil.

Housing Price Trends Posts 2Q2020 Results

Housing Price Trends has updated the Standard price chart data with 2Q2020 housing price data. For this quarter, there were 10 BUY signals and 3 SELL signals. However, only 2 BUY signals (Binghamton, NY and Yuma, AZ) occurred in the top 148 cities in which to invest, and 1 of the 3 SELL signals occurred in the top 148 cities (Midland, TX). Remember the BUY signals that occur outside of the top 148 cities are not as meaningful, since those cities have prices that generally go up and down on much smaller amounts.

The inflation-adjusted annual appreciation for Midland, TX was 11.5% for a 1.75 year hold. This period was not as profitable as previous periods identified by HPT: 47% and 20% per year. Also, Midland, TX is ranked #94 of 148 top cities.

The 3Q2020 and beyond should be interesting times for real estate due to the COVID-19 situation. Expect more volatility in the real estate market! A lot will depend on government relief that may help homeowners, and COVID-19 issues.

Housing Price Trends Posts 1Q2020 Results

Housing Price Trends has updated the Standard price chart data with 1Q2020 housing price data. For this quarter, there were 9 BUY signals and 10 SELL signals. However, only 1 BUY signal (Myrtle Beach-Conway-North Myrtle Beach, SC-NC) occurred in the top 148 cities in which to invest, and 4 of the 10 SELL signals occurred in the top 148 cities. Remember the BUY signals that occur outside of the top 148 cities is not as meaningful, since those cities have prices that generally go up and down on much smaller amounts.

The 2Q2020 and beyond should be interesting times for real estate due to the COVID-19 situation. Expect more volatility in the real estate market!

Housing Price Trends Posts 2Q2019 Results

Housing Price Trends has updated the Standard price chart data with 2Q2019 housing price data. For this quarter, there were 10 BUY signals and 14 SELL signals. However, no BUY signals occurred in the top 148 cities in which to invest, and 12 of the 14 SELL signals occurred in the top 148 cities. This compares to the following for 4Q2018: 3 BUY signals and 1 SELL signals. This is an enormous jump in the number of SELL signals in the top 148 cities. Remember the BUY signals that occur outside of the top 148 cities is not as meaningful, since those cities have prices that generally go up and down on much smaller amounts.

Of the 12 SELL signals in the top 148 cities, 9 were in California. Those cities were Anaheim-Santa Ana-Irvine, Oakland-Berkeley-Livermore, Oxnard-Thousand Oaks-Ventura, San Diego-Chula Vista-Carlsbad, San Francisco-San Mateo-Redwood City, San Jose-Sunnyvale-Santa Clara, San Luis Obispo-Paso Robles, Santa Maria-Santa Barbara, and Santa Rosa-Petaluma.

 

This quarter we feature the Santa Rosa-Petaluma, CA chart. This city had a SELL signal this quarter. If you had sold on this signal you would have attained a 29.3% annual return, adjusted for inflation on a 25% down payment purchase. If you had followed the Housing Price Trends System, you would have attained 42.0% annual return for the 1Q1988-1Q1991 period and 48.2% for the 3Q1999-4Q2006 period. That is profitable way to invest in real estate. Your profits using the Housing Price Trends System are exponentially greater than holding real estate for a small cash flow.

Housing Price Trends, using our proprietary BUY and SELL signals, helps protect you from downturns in the market, and captures optimal appreciation periods.