Case-Shiller: Summer Ends Early for San Diego Home Prices

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. – August data is released in October).

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

August 2011
Month to Month: Down 0.2%
Year to Year: Down 5.5%
Prices at this level in: December 2002
Peak month: November 2005
Change from Peak: Down 38.1% in 69 months
Low Tier: Under $308,529
Mid Tier: $308,529 to $458,544
Hi Tier: Over $458,544

Ten of the twenty metro areas tracked by Case-Shiller saw a decrease in their HPI between July and August (vs. two from June to July): Phoenix and Las Vegas. Washington DC. saw the biggest increase this month, followed closely behind by Detroit and Chicago.

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


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


All three of San Diego’s tiers fell in August. Month to month, the low tier was down 0.6%, the middle tier fell 0.5%, and the high tier decreased 0.3%.

Here’s a new chart for you. In this one, 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).


The effects of 2009′s homebuyer tax credit are dramatically visible in this chart, as is the fairly strong spring we had this year, hitting 20 cities increasing for the first time since July 2005. However, the sudden drop-off of month-over-month gains in August’s data is interesting, since during a “normal” year we wouldn’t expect to see this many cities in the red until December or January. I think this indicates that there is still quite a bit of weakness in home prices.

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


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.


Only one of the twenty cities tracked by Case-Shiller hit a new post-peak low as of August: Las Vegas (again), which is now at 59.5% off its peak value. Dallas still easily wins the prize for the smallest decline, coming in at just 7.3% 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.