Case-Shiller: LA Home Prices Creeping Toward a Bottom?

by Tim Ellis | 7 Comments

It’s time for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). For the full source data behind this post, hit the S&P/Case-Shiller website.

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. – March data is released in May).

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

March 2009
Month to Month: Down 1.4%
Year to Year: Down 22.3%
Change from Peak: Down 41.3% in 30 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 (July 2003).

la-case-shiller-peak_2009-03

Los Angeles’ year-over-year price drops have been moderating now for five months. Both Los Angeles and San Diego are now clocking in with yearly declines of “only” 22%:

socal-case-shiller-yoy_2009-03

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

case-shiller-redfin-markets_2009-03

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.

case-shiller-peak-declines_2009-03

Southern California definitely appears to be on the leading edge of the national real estate trends. With prices still falling over 20% in a year, it’s far too early to call this a sign of a recovery, but it could definitely be a sign of an imminent bottom. The question then becomes how long will we stay at that bottom?

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  • joe

    Tim,

    Seriously dude, stop hyping the stuff up… i loved the chart at the top that started with 2003, when the boom started in 98-00… What happened to the girl who used to write this? she was way better…

  • Bisko

    All of the economic fundamentals do NOT point to a bottom in house prices.

    We have record unemployment that is still INCREASING. We have now the highest percentage of PRIME LOANS defaulting in history!

    The state of California is at a record budget shortfall.

    Just this week, mortgage rates are finally creeping up from the insane, artificially induced levels from the Fed attempting to game the mortgage market, and they are failing.

    ALL of these indicators are for housing prices to fall further. There is not ONE positive stat that indicates that we are anywhere near rising home prices for several years.

  • Doubt

    Did he just seriously call this the bottom? Wouldn’t a bottom be a flat line, not a a decline?
    If you’ve done any research in the housing market over statistics longer than a year (it doesn’t matter what year), there is always statistical ‘uptick’ or increased demand during the spring and trailing into the summer months. It’s nothing more than a seasonal variation. Calling this a bottom would be like calling bottom the same time frame in 2007 before the real decline started. In one word it’s laughable, we still have record foreclosures, and this is before the real toxic mortgages (Alt-A, option ARM) come up for their adjustments over the next few years.

    Don’t foreclosures bring down the value of surrounding homes? I thought so.

    Home values in LA are still far from being corrected. The games the REO/Bank owned agents are playing with their listings to artificially inflate home prices in LA should be criminal (check the forums here on Redfin for many examples). I can’t completely blame them for doing their job (trying to get as much money as possible for the banks), but holding back on presenting offers, not returning calls, delisting and relisting homes multiple times a week or month, and limiting the amount of listed homes to keep inventory numbers low and bidding wars high does a disservice to the real agents working hard to get their buyers into a home they desire.

    Frankly I’m tired of playing the housing game in this area. Let the flippers call bottom, buy a pig at an inflated price, slap lipstick on it, and have it rot on the market another two to three years while the values decline at least another 20-30%. Do I really want to invest in a pig that needs serious repairs and upgrades in a declining market that won’t generate a dime in equity for at least a decade or much longer? Thanks guys, I think I’m going to back to the fence and sit on it awhile longer.

  • http://seattle.redfin.com/blog/author/timothy.ellis/ Tim Ellis

    Some commenters seem to be a little confused about my use of the phrase “a sign of an imminent bottom.” I’m not saying this is the bottom in prices. I’m saying we may be seeing the first signs indicating when we will reach bottom. My personal guess (i.e. – not the official opinion of Redfin in any way) is that the bottom in prices may be 12-18 months out, based on the numbers I’m seeing.

  • mark

    Oh, I see… so he’s saying there is going to be a bottom at some unspecified time in the distant future.

    Seriously though look at those charts. The first one only shows that we are now at 2003 levels nothing else. The second one I can’t figure out. I mean what are those percentages all about? 10%? -30? I like the part where it say “Both Los Angeles and San Diego are now clocking in with yearly declines of “only” 22%” Huh? Is that a good thing. Oh and I think the last two charts show that the market is still falling with no end in sight.

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

    Seriously dude, stop hyping the stuff up… i loved the chart at the top that started with 2003, when the boom started in 98-00… What happened to the girl who used to write this? she was way better…