Big cities may lose some of their appeal
For the housing market as a whole, home prices have been up more than 15% compared with the past peak reached just before the Great Recession more than a decade ago.
But within the 20-city subindex that generally represents only the larger metropolitan areas, the gains above the past peak are relatively lower at 6.4%. Further narrow that group down to the 10-city index, and prices are only 2.7% above their past peak.
That likely reflects affordability constraints in large urban markets like San Francisco, which have driven buyers more toward second- and third-tier cities, leading to more pronounced relative gains in those areas that boost the overall index.
Since the Case Shiller 10-city index is primarily focused on the largest urban areas in the country, "it might reflect a more negative home price path than is actually occurring in other areas like the second- and third-tier cities that new buyers may gravitate to," said Dolan.
That trend could intensify not only because the virus is expected to put more strain on the economy, but because some of the attractions in large metro areas are inaccessible due to social distancing.
"The benefits of dense urban areas — like sports, global airports and concerts — have dropped," Dolan said.