Case-Shiller: Boston Home Prices Decline Slow & Steady

Time for a monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI).

For an explanation of how the Case-Shiller data is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – October data is released in December).

Here are the basic Case-Shiller stats for the Boston area* as of October:

October 2008
Month to Month: Down 1.1%
Year to Year: Down 6.0%
Change from Peak: Down 12.8%

The following chart shows the Boston HPI scaled such that the September 2005 peak is 100% on the y-axis. Data on the x-axis is scaled to display the last time (pre-peak) the Boston HPI was at or lower than it was in the latest data (January 2004).

Boston’s seasonal cycle continued on the down side in October, coming just short of marking a new post-peak low for the index. According to the latest data, two years of home price gains from 2004 to late 2005 have been erased in the three years since the peak.

Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves, so you can compare Boston’s performance to other areas across the country:

And here’s one more chart, in which I have lined 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.

Boston’s far earlier peak in home prices seems to have spared it the more extreme price drops that have been seen in other markets, as home prices here continue to decline much more modestly. Many other markets are currently seeing month-to-month price drops in excess of 2 percent, while Boston’s is only half that.

Is the bottom in for Boston home prices? It doesn’t look like it, according to this data. I’m going to stick with what I said last month, and predict that the earliest we’ll see even the seasonal increase in prices is Q2 next year.

*[Case-Shiller defines Boston as the entire Boston-Cambridge-Quincy, MA-NH Metropolitan Statistical Area, which includes all or part of the following counties: Essex MA, Middlesex MA, Norfolk MA, Plymouth MA, Suffolk MA, Rockingham NH, and Strafford NH.]