U.S. Real Estate Prices Are Growing At The Fastest Rate Since The 2006 Peak

All but two U.S. real estate markets are seeing double-digit annual price growth. The S&P CoreLogic Case-Shiller Index shows February saw annual home price growth hit the highest level since 2006. Three of the Top 20 markets even hit an all-time record for home price growth.

U.S. Home Prices Are Growing At The Fastest Rate Since 2006

U.S. home prices are rising at a break-neck speed in the low-rate environment. The National Index increased by 12.0% in February, compared to a year before. This is an acceleration of January’s annual growth, which came in at 11.2%. National numbers saw the biggest annual growth since February 2006. This was exactly 15 years ago, and five months before the infamous peak.

National S&P CoreLogic Case-Shiller Index

The annual percent change of indexed home prices.
Source: S&P Dow Jones Indices; CoreLogic; Better Dwelling.

Metro Indexes grew a little slower but were within spitting distance of national growth. The 20-City Composite, an aggregate of the 20 largest Metro areas, grew 11.9% from a year before. The 10-City Composite was just a little slower with 11.7% annual growth. Both of those indexes are seeing the highest growth since 2014. 

If You Bought During The Last Peak, You Haven’t Made Much

Despite big growth, the return as an investment isn’t going to wow many. National homebuyers at the July 2006 peak are now up 29.4% as of February. This works out to a 1.73% compound annual growth rate (CAGR). Buyers that bought at the trough (bottom) in 2012 are up 78.2% now. That works out to 3.93% CAGR — an improvement, but about a third of common stock market indexes, such as the S&P 500. 

3 U.S. Cities See A Record Rate of Growth For Home Prices

Breaking the 20-City Index down, there was record growth in three cities — Phoenix, San Diego, and Seattle. Phoenix reported 17.4% annual growth in February. San Diego followed with 17%, while Seattle came in third at 15.4%. This is monster growth, that’s considered a little frothy locally. However, it doesn’t even touch some of the growth seen in Canada’s small cities. 

S&P CoreLogic Case-Shiller Index 20-City Change

The annual percent change of indexed home prices for the 20 largest cities in the Index.
Source: S&P Dow Jones Indices; CoreLogic; Better Dwelling.

U.S. home prices are rising quickly, but still have shown minimal annual growth from the 2006 peak. Whether that means home prices still have room to run, or if they’re going to tap out early is still up for debate. However, experts like Freddie Mac see home price growth moderating later this year.

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  • Pete 3 years ago

    Phoenix leading the market again. I bet it’s Canadians this time. LOL

    • Jason Chau 3 years ago

      Not sure if you’re kidding, but I saw a Twitter post from an Arizona-based economist that was talking about the surge of Canadians buying real estate again.

  • Average Man 3 years ago

    It’s funny. When you read the comment sections on real estate stories in the NYT or WaPo, all the Americans are like “Ruh-roh, this is starting to feel a lot like 2006-07, don’t like it at all” and when you read the comment section on RE stories in the Globe all the Canadians are convinced that prices will never fall and paying 800k for a condo townhouse in Milton or wherever makes them an investment genius.

  • Holton 3 years ago

    Look, there is no bubble the whole world printed insane amount of money.
    All property prices are going up, not just Canada. The sooner we realize this the better. What we need to do is target people who own multiple homes. If we enact the wrong measures it will make things worse for young families.

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