Case-Shiller: Boom on horizon as prices begin to swell

The Case-Shiller Index for February 2015 was released at the end of last month. Paragon has produced a report on the matter, and I’d like to distill some of its facts down here. Keep in mind, by the way, that the Index is always two months behind and that its High-Tier Index most closely reflects our market here in San Francisco.

As illustrated by the first two charts that accompany this article, the price recovery of the Bay Area high-price-tier market saw a spring surge in 2012 through 2014. The price surges that were seen in the springs of 2013 and 2014 had particular dramatic flair, pushed as they were by huge buyer demand, historically low interest rates, increasing consumer confidence and extremely low inventory.

This appears to be happening again when it comes to the spring 2015 market, with significant price increases afoot. If you look at the third and fourth charts that accompany this article, you’ll see what’s been going on in the longer term with regard to the high-price tier that best applies to San Francisco and Marin counties.

Finally, the fifth chart introduces a look at the low-price-tier index since 1988. This tier’s bubble was much more inflated by the subprime lending fiasco, which showed a ridiculous 170 percent appreciation over six years that ultimately resulted in a terrific crash. In fact, the crash in this tier was far worse than the other two price tiers thanks to foreclosure and distressed property crises. It may be quite some time before this tier regains its previous peak values.

I’ll go into more detail about this tomorrow. In the meantime, if you have any specific questions, I have the answers, so don’t hesitate to get in touch.

Dreaming of San Francisco? Cece Blase offers local advice to San Francisco buyers, sellers and owners– and feeds the dreams of those who wish they could live in Tony Bennett’s ‘City by the Bay.’ Call 415-577-0809 or email cblase@paragon-re.com. www.ceceblase.com