I previously detailed that CPI may overstate inflation for an individual who:
- does not own a home
- would like to own a home
- will likely soon buy a home
As can be seen below, the Case-Shiller Price Index flipped negative year over year for the first time in April as today's Case-Shiller release shows further deterioration, with the Composite 10 dropping over 16% year over year.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEggw8fLAuCDYtuCaRGfJbqb9hRcQeMLXBeIEl4h3iFbUBNgPXCtW_Touv-zPi5FD29sf7kyNra438x3fjdmONWiRoUDaEz21bstJZVKKd2LrUH5ygce3gpzkj0O3hH2GdG8SselbV3d3ho/s400/CSPI-Apr.png)
In looking at the Composite 10's five year rolling returns (annualized), even after the huge downturn in prices, returns over the most recent five year period are still positive at ~5% / year. A 5% return over this period is still pretty significant considering current housing fundamentals and tells me there is still room for further deterioration.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjzCc5LFxarkkFlUdeq6hVqAnh1jJ3gpNIo0nJTB63Fm4n_H33sDe4y_9yRdnmtMeJDt2wtbxOmR-Bj_tHTUjYt0ogI5r-eRZXoDWSQD4TFLpzTR4qiJBHgbiPVHU8aM9LOiNydaZpFV0w/s400/csi-apr.png)
I'd just like to say that this is one of the most fascinating graphs I've seen in a while. please keep tracking this.
ReplyDelete