Case-Shiller highs and lows

The Case-Shiller Index report for May 2014 for the 5-county San Francisco Metro Statistical Area was released last week. It showed another small bump for home prices from April to May. The aggregate or total index is now up approximately 55% since the market recovery began in early 2012.

When Case Shiller (C-S) speaks of the “San Francisco Market”, they really mean five counties combined: San Francisco, Marin, San Mateo, Alameda and Contra Costa. This makes the statistics a mixed bag to interpret as communities with lower housing costs are mixed in with San Francisco’s more expensive homes.

However, Case-Shiller also breaks out home price changes by price tier – low, middle and high – and each tier has experienced dramatically different trend lines since 2000. We find the behavior of the mid-and high priced tier the most reflective of the San Francisco market. The low price tier – homes found mostly in Alameda and Contra Costa counties experienced a crazy bubble when prices were running up and subsequently experienced a much bigger crash due to foreclosures and short sales.

The middle and high price tiers, which predominate in San Francisco, Marin and San Mateo, experienced much smaller bubbles and crashes. This is dramatically illustrated in the first graph below.

In all the Case-Shiller Indices the numbers refer to a January 2000 home value of 100. Thus a reading of 195 signifies a value 95% above that of January 2000.

All tiers have seen big recoveries since 2012 began, but only the high-price tier has now exceeded previous peak values attained in 2006-2007. While the low-price tier is recovering nicely, its home prices are still far below previous peak values. It’s probably unreasonable to expect them to be surpassed anytime soon.

An exclusive focus on the San Francisco market reveals a performance that outstrips the general C-S index for high-tier homes in the San Francisco region. This chart is just a sample of how some San Francisco neighborhoods – especially its most expensive ones – have far exceeded general Bay Area appreciation trends, as far as previous peak values are concerned. Many of San Mateo’s cities have experienced a similar dynamic, as they both share the dominant effect of the high-tech wealth effect on home prices.

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

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