Case-Shiller: Boston Home Prices See Record Drop in November

I apologize again for the multi-week radio silence here. We’ve revamped our data delivery to be able to better streamline the whole process, and from now on there will be a regular schedule of in-depth data in this space. For now though, it’s time for our 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. – November data is released in January).

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

November 2008
Month to Month: Down 2.6%
Year to Year: Down 7.4%
Change from Peak: Down 15.0% in 38 months

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 (August 2003).

Boston’s Case-Shiller HPI continues to decline heading into the winter, as we predicted it would back in December’s post. November’s 2.6% month-to-month drop was Boston’s largest yet, exceeding November 2006’s MOM drop by nearly a full percentage point. Could Boston’s period of slower-than-average decline finally be over?

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.

Although it has been declining longer than every other Case-Shiller-tracked market, total price declines in Boston have been relatively moderate to date. November’s steep drop stands out as an unusually extreme move in what has otherwise been a surprisingly orderly unwinding here.

It will be interesting to see if this marks the start of a new trend or a just one-month aberration.

*[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.]

January City/Neighborhood Price Reductions

Let’s take our monthly look at which cities and towns have the most price reductions.

The following charts show the percent of MLS, FSBO or REO listings that were price-reduced at some point before leaving the market (either sold or removed unsold from the market) in the past 90 days. Cities/towns or neighborhoods in which the number of homes taken off the market was too small to provide believable estimates are excluded from ranking.

For those that are interested, I have uploaded the full data set in Excel format here (saved in Excel 97-2003 .xls format by request). In order to keep from overwhelming you with charts, I am leaving out the top ten cities/towns/neighborhoods with the least reduced-price listings from the post, but you can still see that chart in the downloaded file.

First up are the top ten cities with the most price-reduced listings:

Of the 201 cities/towns we ranked in the Boston Area this month, 161 (80%!) had price-reduced ratios of fifty percent or more. This is up from about 66% last month. Only Merrimac has consistently been in the top ten for the last three months.

Getting a little more granular, let’s look at the top ten Boston Area neighborhoods for price reductions:

Just 11 of the 59 neighborhoods we ranked in the Boston Area had a price-reduced ratio of fifty percent or more. East Boston and Logan Airport / Jeffries Point both made the top ten for three months in a row.

For home buyers, cities and neighborhoods that consistently remain near the top of the list for price reductions may be a good place to potentially hunt for bargains. Once a home has been on the market a while, many buyers tend to overlook it, even though a price reduction or two may have brought it into a more desirable price range.