The chart below shows the S&P/Case Shiller Home Price Index, which saw a substantial increase during the 2000s before the financial crisis in 2007. The housing market crashed during the crisis and remained flat until 2012 when it began to rise again. During the pandemic, the Federal Reserve implemented an enormous monetary policy, and the federal government spent trillions of dollars, leading to a significant increase in asset markets, including the housing market. However, the Fed has started to increase interest rates, causing mortgage rates to rise by over 6%. Consequently, the housing market has started to experience pain, and house prices have declined since mid-2022 after hitting their highest point. The extent to which they will continue to decline in the future is uncertain.
During the pandemic period from 2021 to 2022, the combination of extremely low mortgage rates and fiscal policy led people to move out of cities and into less expensive areas. As a result, house prices saw a substantial increase. The national prices rose by 35%, with Miami experiencing the largest increase at 52.53%. On the other hand, San Francisco had the lowest increase at 23.96%. In my city, Atlanta, house prices increased by 41.08% during this period.
“The following charts display the annual changes in the S&P Shiller index for various cities in the United States from 2001 to 2022. The degree of fluctuation varies among the cities, with some showing high volatility and others exhibiting relative stability.”
Forecast the prices of S&P & Shiller Index futures in U.S metro cities.
Below are charts showing the forecasted S&P Shiller index for several cities. While some cities are expected to continue declining, others are expected to bounce back and continue rising. However, it is important to note that forecasting is a challenging task due to the influence of various factors such as interest rates. To generate these forecasts, I utilized the ARIMA model.
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