(See recent posts on Phoenix Case-Shiller Home Price Index.)

In an earlier post I said, “This graph says it all.” Then I graphed out the Phoenix Case-Shiller index by price tiers.


This graph is probably the most pessimistic chart I’ve seen in a while, at least for the upper tier Phoenix homes. And on the other hand it’s probably the most optimistic I’ve seen for the lower priced Phoenix homes.

This data is only through March, the most current available. I wonder what the data for April and May will show.

I don’t know the price levels of these 3 Case-Shiller price tiers but similar data from ASU (which, really, I should have used instead of the Case-Shiller data) has the price of the upper tier around $175,000, if I recall correctly. Their lowest tier was under $100,000.

You can clearly see the differential impact the $8,000 first-time home buyer tax credit had on the 3 price levels of homes during the last half of 2009 and the first half of 2010. The $8,000 bump really moved prices in the lowest tier but no so much for the highest tier. And you can clearly see what happened to prices when the program ended, especially for the lowest tier.

In the video below I explain why the lowest priced homes continued to appreciate in 2006 long after other homes had pretty much stopped appreciating.

The current large separation in the three indices is completely intriguing to me. It would be a great subject for a PhD dissertation in Economics. The split reveals some economic truths. I just don’t know what they are.

Will the historical relationship between the 3 tiers return? I don’t know. But if it does, how? Will the lowest tier jump up? Or will the highest tier fall down? Or will the 3 tiers end up with new, permanent relationships to each other? Intriguing!

Video Commentary