Home Prices — A Whole Lot Better Performance Than Autos

Yesterday the Case-Shiller Index (owned by Standard and Poors), reported that U.S. home prices declined once again, now down from the peak on a national average 33.9 percent based on  the 20-city composite index.

Once again I invoke the TINSTAANREM clause—There Is No Such Thing As A National Real Estate Market since not all markets are the same.  Percent changes from the peak for the 20 cities in index are included in the following table.  Dallas was down just 9 percent from the peak in April 2007 (the best performer of the 20 cities), while Las Vegas  was off a whopping 61.8 percent since April 2006.

Case-Shiller Home Price Changes
Decline From the Peak
Market

Percent Change

AZ-Phoenix
-55.7%
CA-Los Angeles
-40.8%
CA-San Diego
-40.0%
CA-San Francisco
-41.2%
CO-Denver
-10.7%
DC-Washington
-28.7%
FL-Miami
-51.3%
FL-Tampa
-47.9%
GA-Atlanta
-35.2%
IL-Chicago
-35.7%
MA-Boston
-17.5%
MI-Detroit
-46.8%
MN-Minneapolis
-36.4%
NC-Charlotte
-17.4%
NV-Las Vegas
-61.8%
NY-New York
-24.7%
OH-Cleveland
-20.3%
OR-Portland
-28.5%
TX-Dallas
-9.0%
WA-Seattle
-31.1%
Composite-10
-34.0%
Composite-20
-33.9%

With these price declines you might question why would anyone buy a home?  yet most of us repeat this buy-high, sell low multiple times in our lives—not on housing, however, but autos.   Vehicle price erosion makes housing look a good deal.

Yahoo reports a Forbes.com article listing the worst and some of the better price performance for autos. The better performers in maintaining value over five years are worse than the U.S. price declines in the same period.  The Mini Cooper, for example, drops 48 percent in value in five years, while the 2010 BMW M3 Couple, declines 56 percent. Compared to the 33.9 percent price decline for homes in the past five years, autos are much worse—and we buy them multiple times during our lives.

The Yahoo-Forbes five worst price declines were as follows:

5-Year Auto Depreciation Rates
Auto

5-year
Price
Decline

Chrysler Sebring LX Convertible
84%
Mercedes-Benz S-Class S65 Sedan
84%
KIA Sedona LX Minivan
84%
Lincoln Town Car Signature Sedan
83%
Mercury Grand Marquis LS Sedan
83%

Want to know how much your car is dropping in value (assuming it is on the list)?  Click here and you might not be as critical of housing prices (which will come back in most markets eventually), while autos—except for a few future classics and collectables–will depreciate away.

Ted

Comments

  1. Belinda Loomis

    Do you have a web-ex or video for 2012 Economic Forecast, preferably in Texas?

    1. Ted C. Jones Post author

      No I don’t have either one.

      Ted

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