Posted by: Rick | January 8, 2012

Home Prices Continue Decline


Here are the basic Case-Shiller stats for the Los Angeles area (which Case-Shiller defines as LA and Orange Counties) as of October:

October 2011 Month to Month: Down 1.5% Year to Year: Down 4.9% Prices at this level in: September 2003 Peak month: September 2006 Change from Peak: Down 39.6% in 61 months Low Tier: Under $296,106 Mid Tier: $296,106 to $489,450 Hi Tier: Over $489,450

Nineteen of the twenty metro areas tracked by Case-Shiller saw a decrease in their HPI between September and October (vs. eighteen from August to September): Only Phoenix saw an increase.  Wait, Phoenix?  Yup, Phoenix.  Atlanta fell the most in October (again), falling a whopping 5.0% in a single month.

Here’s a look at the latest local tiered data, back through 2000:

LA Case Shiller Tiers 2011 10 Case Shiller: Seasonal Slide in Home Prices Continues

And here’s a closer look at the recent changes, with the vertical and horizontal axes zoomed in to show just the last year:


All three of LA’s tiers fell in October, with the high tier taking the biggest hit.  Month to month, the low tier was down 0.8%, the middle tier fell 0.9%, and the high tier decreased 1.5%.

In this next chart, I’ve visualized the month to month trends of all twenty Case-Shiller-tracked cities.  Green and above the horizontal axis if they were increasing in the month charted, red and below the axis if they were decreasing.  I’ve excluded 2000 through 2004 since they looked largely the same as 2005 (mostly green).

Case Shiller MoM Gains Losses 2011 10 Case Shiller: Seasonal Slide in Home Prices Continues

Just four months ago, all twenty cities saw month to month gains.  Now just one is not the red.

Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves:

Case Shiller Redfin Markets 2011 10 Case Shiller: Seasonal Slide in Home Prices Continues

Here’s our peak decline chart, in which we line up the peak Case-Shiller HPI value for each of Redfin’s markets, so we can see how long each market has been declining, and how much it has dropped from the peak.

Case Shiller Peak Declines 2011 10 Case Shiller: Seasonal Slide in Home Prices Continues

Two cities hit new post-peak lows in October: Atlanta at 33.2% off peak and Las Vegas at 60.7% off peak.

Methodology: The Case-Shiller index tracks price changes in sets of homes of similar size and style to better determine changes in what people are willing to pay for the same home over time.  If data is available from an earlier transaction for the same home, the two sales are paired and treated as a “repeat sale.”  Repeat sales that are too far apart, sales between family members, lot splits, remodels, and property type changes (e.g. from single-family to condos) are excluded from the calculations.  All remaining repeat sales are totaled together and weighted based on the time between each sale, then the data for the most recent three months is averaged together to create a given month’s index value (i.e. – September’s index represents the average of the data from July through September).

The three price tiers plotted in the charts below simply represent the top, middle, and bottom third of all sales, based on the initial sale price.  In other words, if there were 3,000 sales in the three-month period, 1,000 of them would be in the low tier, 1,000 in the middle tier, and 1,000 in the high tier, by definition.

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