What we got for our $12 Trillion in National Debt
The S&P/Case-Shiller results for December 2010 were released last week (2 month lag). The both the 10 and 20 market national composite indices declined versus November (down .9% and 1.0%, respectively), along with 19 of the 20 markets tracked by the Indices. The only market to increase, strangely enough, was Washington DC, which gained .3% over November. Miami lost .5% while Tampa showed the largest percentage drop of all markets losing a whopping 2.6% compared to November. In fact, the December decline represents about 45% of the entire year’s 6.2% drop for Tampa.
For all of 2010, the 20 market national composite lost 2.4%. The Miami market dropped 3.7% and, as already mentioned, Tampa dropped 6.2%. The worst performing markets were Atlanta (-8.0%), Phoenix (-8.3%), and Detroit (-9.1%). The best performing markets for 2010 were LA (-.2%), San Diego (+1.7%), and, amazingly, Washington DC (+4.1%).
As you may know, the Case-Shiller Indices are calculated such that January 2000 is equal to 100. So the change from year 2000 to any period is easily calculated by dividing the change in the current index by 100. For example, if the current index is 125, then the index has appreciated 25% since January 2000. If the index is 90, then it has depreciated 10% since January 2000. So, with the most recent report being the end of a year, let’s see how prices have changed over the past 11 years.
For the Miami market, the December index is 143.11 which implies that home prices have increased 43.11% in Miami since Janyuary 2000. The Tampa index stands at 130.23 similarly impling that home prices in that market have increased only 30.23% over the past 11 years (not withstanding the fact that in June 2006 the index was 238 which means that prices had risen 138% in 6.5 years). The 20 market national composite is 142.42.
The markets with the worst 11 year cumulative record (i.e. with the lowest December 2010 indices) are Cleveland (99.7 or basically unchanged since January 2000), Las Vegas (99.48 also essentially back to January 2000 price levels), and Detroit (65.93 which means home prices have lost about one third of their value over the past 11 years).
Those markets showing the best appreciation (with the highest December 2010 indices) are San Diego (158.9 or 58.9% increase in the past 11 years), LA (170.9 or a 70.9% increase in the past 11 years), and the gold medal winner, Washington DC (186.1 or an 86.1% increase over the past 11 years).
Most people will tell you that the two biggest drivers of home prices are personal income and population growth. So….. how could Washington DC outstrip every other market in the country, most soundly so?
To answer the question raised in the title of the article, I think the only concrete thing we have to show for our $12 trillion national debt is a thriving residential real estate market in DC.