Case-Shiller: Summer is Kind to San Diego Home Prices

Before we get going with this month’s Case-Shiller post, I’d like to apologize for the lack of an update last month. Long story short, this particular duty slipped through the cracks while I was out on leave. We heard from a number of readers who were lamenting the missing post. Rest assured, we have heard you and it will not happen again!

It’s time 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. – July data is released in September).

Here are the basic Case-Shiller stats for San Diego County as of July:

July 2011
Month to Month: Up 0.1%
Year to Year: Down 5.9%
Prices at this level in: December 2002
Peak month: November 2005
Change from Peak: Down 38.0% in 68 months
Low Tier: Under $307,929
Mid Tier: $307,929 to $458,387
Hi Tier: Over $458,387

Only two of the twenty metro areas tracked by Case-Shiller saw a decrease in their HPI between June and July (vs. none from May to June): Phoenix and Las Vegas. Weirdly, Detroit saw the biggest increase, followed by Minneapolis.

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

SD-Case-Shiller-Tiers_2011-07

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

SD-Case-Shiller-Tiers_2011-07

Las Vegas’ low and middle tiers rose in July, while the high tier lost a bit of ground. Month to month, the low tier was up 0.4%, the middle tier rose 0.5%, and the high tier decreased 0.5%.

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

Case-Shiller-Redfin-Markets_2011-07

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_2011-07

Only one of the twenty cities tracked by Case-Shiller hit a new post-peak low as of July: Las Vegas, which is now at 59.3% off its peak value. Dallas easily wins the prize for the smallest decline, coming in at just 7.5% off its peak value.

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.