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We've been saying that Austin was in good shape to withstand a downturn in home prices because our prices were not so inflated as those in other cities.
As evidence of this, here's a chart showing the S&P/Case-Shiller Home Price Indices for a number of US cities. The index value is determined by resales of the same homes over the time period. The COMPOSITE is a nationwide index. All started with an index value of 100 in January 2000. For most cities, data goes back to 1987, so there was substantial data available before January 2000. These numbers go through September 2007, as they are released 2 months late.
Miami and LA led the pack up and they are leading it down, as well. There is no index available for Austin, though our guess puts it in the range of Denver or Atlanta. Over the January 2000 to September 2007 period, average prices are up 42% and median prices up 33% . Using this method, not the same as the index, we stand at 142 or 133. We're guessing a little stronger, maybe 150-160 for Austin.
After home prices in Miami and LA nearly tripled in 7 years, wouldn't you think there might be an "adjustment" at some point?
But hindsight is always 20-20. The Chicago Mercantile Exchange has a futures contract for many of the cities and for the Composite, so you have the opportunity to trade and go short on housing prices in the future if you have a strong stomach and are willing to take that risk.
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