Case-Shiller: Home Prices Continue Dropping Rapidly in LA

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 Los Angeles area (which Case-Shiller defines as LA and Orange Counties) as of October:

October 2008
Month to Month: Down 2.6%
Year to Year: Down 27.9%
Change from Peak: Down 34.4%

The following chart shows the Los Angeles HPI scaled such that the September 2006 peak is 100% on the y-axis. Data on the x-axis is scaled to display the last time (pre-peak) the Los Angeles HPI was at or lower than it was in the latest data (January 2004).

la-case-shiller-peak.png

Los Angeles home prices have declined at a fairly steady rate since late last year, and October was no exception. While October’s 2.6% drop was among the market’s bigger month-to-month declines, the largest month-to-month price drop was 4.3% in February.

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

case-shiller-redfin-markets.png

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.

case-shiller-peak-declines.png

Of the eight markets Redfin serves, Los Angeles home prices have fallen the fastest two years after their respective peaks.

Looking at this latest data, there still does not appear to be any bottom in sight for Los Angeles home prices. If you are a seller that took your home off the market for the winter hoping for a rebound in spring, the current trends point toward continued disappointment. Of course, for buyers continued price drops means continually better deals to be found.

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  • http://www.personalrealestateinvestormag.com Andrew Waite

    The S&P/Case Shiller index is bad for American Consumer Confidence because of their objectives and methodology. Only 20 most volatile cities, only up to 5000 sales pairs per city (MSA) to create an index for a vast multi-market housing basket. (23, by city, rolled up by 10, then 20 then national)

    Case Shiller uses a laughably small sample that lumps all neighborhoods together to get to an index. This overweights foreclosures in modest neighborhoods so drags down the MSA average.

    Go look at the better indexes and most obviously those that address specific discrete address valuations at IAS360, NAR and OFHEO. All show a significantly lower drop than Case Shiller.

    Also see Personal Real Estate Investor Magazine January cover story outlining the agenda Karl and Bob have with MacroMarkets to pump their housing index hedge find. Anyone smell conflict?

    We tried to interview them for the article and they would not talk while their PR agency lied abut their availability. Even the NYT prefers IAS360 to Case Shiller as the holes and conflict are beginning to bother that “bastion of truth and editorial objectivity.”

    Best Andrew Waite
    http://www.PersonalRealEstateInvestor.Mag

  • infiniti

    Andrew Waite,

    You sir should just go away. Case / Shiller won’t respond to you because you are an idiot.

    http://www.reinusa.com/ReinReport/Market_Bottom_Called.pdf

    Sincerely,

    Renter who knows how to value real estate.

    • Realworldu

      Andrew Waite of Personal Real Estate Investor Mag called a bottom in 2008 – could he have been more wrong??? I think he's an arrogant guy who's just promoting his tacky magazine, just my humble opinion but check the facts. Aren't you glad you didn't follow his advice?

  • HB Bear

    I have to agree with Infiniti: this Andrew character has proven he can’t asses a market as proven by his article prematurely calling the bottom as the market declined at an historic pace.

    That he would believe that anyone, including Case/Shiller, would be interested in what he has to say is beyond me.

    Ignore the Case/Shiller data at your peril.

  • David

    Come on, obviously it was a typo. Andrew meant the 1st Qtr of 2009… or 10 or 11.

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  • Me

    Wow, Andy. You really missed that one. I’m sure your right this time though. Why in the world would we judge someone’s current reasoning on their past track record.

    One question: who does it feel to suck so bad at your life’s work? Your future epitaph:

    He lies Andrew Waite
    at being a hack, he was really great.

    Now, go kiss your wife and kids, they must be so proud, and understand that some people listen to you and will get hurt but trusting you. I understand you are just trying to promote your business but life is short, don’t screw it up by thinking it’s all about making money.

  • http://www.socalbubble.com Chuck Ponzi

    Wow, Infiniti,

    I think you’ve all got Andy all wrong.

    You see… it was all about excessive pessimism that’s causing this decline in home prices. If people just stopped being so negative towards home prices, they’d stop falling.

    It’s what I’d like to call a “mental recession”. In fact, America isn’t in a recession at all. People can still get public assistance and then they can buy houses in Orange County and LA. They can also invest in other consumer durables such as jet skis and vacation homes. Don’t you all know that real estate always goes up?

    Jeebus, it’s like talking to a bunch of bubble heads.

    Chuck Ponzi :)

  • http://www.edhardyworld.co.uk ed hardy

    He lies Andrew Waite
    at being a hack, he was really great.

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