Bay Area Home Prices Up Again

Case Shiller released their home price indexes for June on Tuesday. Prices rose in 18 of the 20 markets that they cover. The Bay Area was one of the strongest markets, with prices rising by 3.8% compared to the prior month.

Case Shiller publishes its indexes with a two-month lag. If you don't want to wait that long, Dataquick provides median sale prices, which they publish with only a one-month lag. They released their results for July even before Case Shiller had released their results for June. And while Case Shiller publishes only two indexes for entire the Bay Area, Dataquick publishes a median sale price for every zip code.

Median sale price is a poor way to measure price movements for a diverse market like the Bay Area. It is sensitive, not only to price movements, but to changes in the mix of homes as well. July's results are a case in point. The best-performing county in the Bay Area was Santa Clara, where the median sale price rose by 10% compared to June. Yet the median sale price for the entire Bay Area rose by 12%. The explanation for this odd result is that sales volumes fell in some of the less expensive counties, and rose in some of the more expensive counties. The Case Shiller indexes were specifically designed to eliminate this problem.

Having said that, I'm usually too impatient to wait an extra month for the Case Shiller numbers. I'm mainly interested in county-level numbers anyway. Here's a chart of median sale prices for San Francisco County.

If you put any stock in median sale prices, the San Francisco market bottomed out in January, and has risen 14% since then.

By the way, the commonly quoted Case Shiller indexes are for single family homes only. Focusing on that statistic can cause its own problems if you're interested in a market like San Francisco, where condos comprise such a large fraction of the housing stock.