It’s time once again 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. – December data is released in February).
Here are the basic Case-Shiller stats for the Los Angeles area (which Case-Shiller defines as LA and Orange Counties) as of December:
Month to Month: Down 2.5%
Year to Year: Down 26.4%
Change from Peak: Down 37.4% in 27 months
Last month I questioned whether a slight slowdown in the rate of year-to-year price drops may be the first sign that home prices are on their way to stabilizing in Los Angeles. Of course, a single month of data is not enough to come to any real conclusions, but it was interesting, nonetheless.
This month, the year-to-year data in Los Angeles and San Diego ticked up again. Here’s a chart to demonstrate what I’m talking about:
Now, I’m not saying that two months of data is enough to proclaim the imminent demise of the housing bust, but it does at least show us that November’s data was not merely a one-month anomaly. This is definitely something we will be keeping our eyes on in the coming months.
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 (November 2003).
According to the Case-Shiller index, as of December home prices in Los Angeles have “rewound” over five years.
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:
And here’s our final 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.
While home prices in other cities have been declining longer, not many have declined further than Los Angeles. So it would make sense for Los Angeles to be one of the first to find the actual bottom. I still thing we’ve got a ways to go yet, but if the pattern of moderating year-to-year declines continues, we may at least know where to look.