Case-Shiller: LA's Middle Tier Took the Biggest Hit in December

It’s time (a bit past time, actually) for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). The Case-Shiller data is generally considered to be the most reliable measure of overall home price changes for a region, since they only consider repeat sales of homes when calculating their index, instead of looking at all the homes that sold in a given month.

For the full source data behind this post, hit the S&P/Case-Shiller website. For a more detailed explanation of how the Case-Shiller Home Price Index 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:

December 2011
Month to Month: Down 1.1%
Year to Year: Down 5.2%
Prices at this level in: August 2003
Peak month: September 2006
Change from Peak: Down 40.8% in 63 months
Low Tier: Under $289,982
Mid Tier: $289,982 to $474,017
Hi Tier: Over $474,017

Eighteen of the twenty metro areas tracked by Case-Shiller saw a decrease in their HPI between November and December (one less than between October and November): Only Phoenix (for the third month in a row) and Miami saw an increase. This month Detrioit beat out Chicago and Atlanta for the bottom spot, falling 3.8% in a single month.

Here’s a look at the latest local tiered data, back through 2000:

LA-Case-Shiller-Tiers_2011-12

And here’s a closer look at the recent changes, with the vertical and horizontal axes zoomed in to show just the last year:

LA-Case-Shiller-Tiers_2011-12

All three of LA’s tiers fell in December. Month to month, the low tier was down 0.6%, the middle tier fell 1.0%, and the high tier decreased 0.7%.

In this next chart, I’ve visualized the month to month trends of all twenty Case-Shiller-tracked cities. Green and above the horizontal axis if they were increasing in the month charted, red and below the axis if they were decreasing. I’ve excluded 2000 through 2004 since they looked largely the same as 2005 (mostly green).

Case-Shiller-MoM-Gains-Losses_2011-12

Tiny improvement, better than a year ago, but worse than December 2009, when 5 cities saw an increase.

Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves:

Case-Shiller-Redfin-Markets_2011-12

Here’s our peak decline 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_2011-12

Four cities hit new post-peak lows in December: Tampa (not shown above) at 47.5% off peak, Atlanta at 36.0% off peak, Las Vegas at 61.4% off peak, and Seattle at 31.9% off peak. The 10-city and 20-city composites both also hit new lows, both at 33.8% off peak.

Methodology: The Case-Shiller index tracks price changes in sets of homes of similar size and style to better determine changes in what people are willing to pay for the same home over time. If data is available from an earlier transaction for the same home, the two sales are paired and treated as a “repeat sale.” Repeat sales that are too far apart, sales between family members, lot splits, remodels, and property type changes (e.g. from single-family to condos) are excluded from the calculations. All remaining repeat sales are totaled together and weighted based on the time between each sale, then the data for the most recent three months is averaged together to create a given month’s index value (i.e. – September’s index represents the average of the data from July through September).

The three price tiers plotted in the charts below simply represent the top, middle, and bottom third of all sales, based on the initial sale price. In other words, if there were 3,000 sales in the three-month period, 1,000 of them would be in the low tier, 1,000 in the middle tier, and 1,000 in the high tier, by definition.

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  • Paulx_66

    case shiller is far from the most timely…it is a weighting of last 3 months.  it is a decent index from MSA level and higher but has poor zip code level coverage.  Both LPS and Corelogic offer better indices with LPS having the most zip code coverage and the benefit of seperate pricing for REOs.

  • Dbwolfberg

    Certainly they can do a 3-d overlay over all of Southern California for a more accurate view of zip codes and neighborhoods.

  • Larry

    Another place to see good home pricing trend is : http://www.homepricetrend.com

    It's much more detailed and goes city by city.  Looks like prices in Los Angeles and other cities have been creeping up since December.  There's been price gains month over month for the last 3 months.

  • Katorcapital

    Actually, these trends don't make any sense, I am an agent and houses in the San Fernando Valley, which makes up half of city of LA is much higher than what I see here.