Is Case-Shiller Right about Real Estate?

One of my clients today sent me this article and I’m really glad he did. It’s important because it speaks directly to one of the biggest if not the largest investment any of us will make. Is Case-Shiller right about real estate? Well before getting into let me say the answer is “…it depends…” Depends on what? Simple, it depends on perspective.

is case-shiller right about real estateThe article was entitled “Is Buying A House Overrated?“.  In this article it was observed that the Case-Shiller Index numbers dropped this week. The index tracks national home prices. And there’s your first red flag … “national home prices…”

Robert James Shiller is one smart guy; Nobel Laureate in 2013 and professor of Economics at Yale. My paltry degree in economics from UCLA doesn’t hold a candle and I certainly have not won a Nobel Laureate.

But I know facts and I know what’s in front of me.

Is Case-Shiller Right about Real Estate?

In Shiller’s book “Irrational Exuberance”, Shiller makes the case that home prices over the long run grew by less than 0.6% per year while at the same time the S&P 500 grew about 7%. So should you be renting instead of buying a home?

Again the answer lies in perspective.

There are two old sayings in real estate. I bet you already know the oldest…

“Location, Location, Location”

There’s a corollary to that however and that adage is called “Everything in Real Estate is Local”

So is Case-Shiller Right about Real Estate? Again, it’s perspective and I’ve maintained for years that there is no such thing as a “national” real estate market, at least not one that really has meaningful actionable information. Oh it’s interesting, but I wouldn’t advise making the index a major part of your decision process.


Well, take a look at this chart – and yes, I have the data … remember, I’m a UCLA Econ Grad and unable to turn that part of my brain off.

is case-shiller right about real estate

So there you have it. Facts. Perspective. Now, there was another interesting part of the article and it dealt with whether or not we are in another bubble. Will there be a correction to this latest appreciation cycle. Of course! And what if you had the tools to determine the “when” and “how deep” that correction would be? Would that interest you?  I put my money into South Bay Real Estate and Palos Verdes homes any day over the S&P 500…for the long term.

Use the green “CONTACT” button on the bottom left of your screen and let’s set a time to do an online screen share so that I can walk you through my proprietary information that will provide pretty strong clues.

Until then … thanks for reading.