Washington DC Metro Area Housing Prices Rose in May 2010
The headline that caught my eye was in the July 28, 2010 issue of USA Today which stated: “Home Prices Rose 1.3% in May”. To me that statement is misleading because the 1.3% increase for the Composite-20 Index is actually recovery, not new appreciation in home values. Not surprising, the national index peaked in the second quarter 2006 at 189.93 and bottomed in the second quarter 2009 at 111.11. The composite and city indexes were normalized in the first quarter of 2000 to a value of 100, and are based on three month moving averages. The U.S. National Home Price Index is calculated monthly with a two month lag and is a house price index using a modified version of the weighted-repeat sales methodology.
The quoted data is provided by the Standard & Poor’s/Case-Shiller index. The index was developed by Karl Case, Robert Shiller and Alan Weiss beginning in the 1980′s but it wasn’t until 1991 when the index became a respected indicator. The S&P/Case-Shiller Composite 10 and 20 Index are two of those frequently quoted in the Washington Post and USA Today papers when comparing the top Metropolitan Statistical Areas (MSA) in the United States and the Washington Metro area is one of the 10.
The Washington Metropolitan Area (WDXR index) is formally known as the Washington-Arlington-Alexandria, DC-VA-MD-WV MSA by the U.S. Census Bureau, and informally known as the National Capital Region. The United States Office of Management and Budget defines the Metropolitan Statistical Area (MSA) to include the larger Baltimore-Washington Metropolitan area and is the fourth largest combined statistical. So it is certainly news when home prices increase in the National Capital Region!
The Washington metro area index increase was 1.5% in May over April 2010 and the one-year change was 7.4%. The seasonally-adjusted data for the Washington, DC metro area states that price index peaked around 250 range (not surprisingly) in the middle of 2006 and currently the Washington metro area is one of the best recovering market areas, now hovering around a price index of 180. So as you can see we are clearly still deep in recovery mode, not true appreciation. My husband is a former newspaper publisher and often cautions people to understand what they are reading!
