Case-Shiller: Los Angeles Home Price Drops Slow 2 Months in a Row

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:

December 2008
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.

February City/Neighborhood Price Reductions

Let’s take our monthly look at which cities and towns have the most price reductions.

The following charts show the percent of MLS, FSBO or REO listings that were price-reduced at some point before leaving the market (either sold or removed unsold from the market) in the past 90 days. Cities/towns or neighborhoods in which the number of homes taken off the market was too small to provide believable estimates are excluded from ranking.

For those that are interested, I have uploaded the full data set in Excel format here. The downloadable Excel file also includes charts showing the top ten cities/towns/neighborhoods with the least reduced-price listings.

First up are the top ten cities with the most price-reduced listings:

Of the 106 cities/towns we ranked in LA County this month, 41 (39%) had price-reduced ratios of fifty percent or more. Westlake Village, El Segundo, and Lomita continued to make a strong showing this month, carrying over from last month’s top ten.

Getting a little more granular, let’s look at the top ten LA County neighborhoods for price reductions:

Of the 165 neighborhoods we ranked in LA County this month, 85 (52%) had a price-reduced ratio of fifty percent or more. Baldwin Hills carried over its #1 spot in the top ten from last month, and West Adams made a repeat appearance as well.

There is definitely some consistency in the number of homes seeing price reductions month to month in the cities and neighborhoods around LA County. If finding a good deal on a home is important to you, these neighborhoods might be a good place to start, as higher ratios of reduced-price homes indicate sellers that need to sell and are willing to lower the price to do so.

Meet Redfin’s Partner Agents in the Inland Empire

Our customers keep asking us, “When are you coming to my area?” Well, the wait is over for folks in North and South Riverside, Pomona, San Bernardino, and Ventura Counties. Redfin is now partnering with agents in outlying areas beyond our local agents’ reach to bring our values of fanatical service, data-driven performance and better value to your neighborhood.

Many Applied, Few Were Chosen

We put our partners through the ringer by conducting in-person interviews and requiring at least three customer referrals; the average Redfin partner in the greater Los Angeles area has completed over 320 deals. All of our partner agents have embraced Redfin’s transparency ideal: you see every transaction and every customer review, good and bad. Just like with Redfin’s own agents, there’s no obligation. In addition to getting great service, you’ll also save money — usually around $1,000-$2,000.

Learn more about our partner agent program by reading Redfin CEO Glenn Kelman’s blog post.

If you’re an agent and you’d like to become a Redfin partner, please get in touch.

Sign up to be notified when we come to your area because in the next three months, Redfin will be adding partner agents in Coachella, Santa Clarita and Palmdale.

Partner Agents Serving North and South Riverside, Pomona, San Bernardino, and Ventura Counties

	Derek Serving Pomona Valley, North Riverside County, San Bernardino Valley Homes Closed: 1349+ Experience: 23 years
	Jeannette Serving San Bernardino Valley, Pomona Valley, North Riverside County Homes Closed: 35+ Experience: 11 years
	Julie Serving San Bernardino Valley, North Riverside County, Pomona Valley Homes Closed: 38+ Experience: 3 years
	Mona Serving North Riverside County Homes Closed: 700+ Experience: 26 years
	Scott Serving North Riverside County Homes Closed: 172+ Experience: 7 years
	Sidney Serving North Riverside County, San Bernardino Valley Homes Closed: 31+ Experience: 4 years
	Terrie Serving North Riverside County, San Bernardino Valley Homes Closed: 54+ Experience: 9 years
	Karen Serving South Riverside County Homes Closed: 227+ Experience: 21 years
	Barbie Serving South Riverside County Homes Closed: 780+ Experience: 19 years
	Kurt Serving South Riverside County Homes Closed: 37+ Experience: 17 years
	Miguel Serving South Riverside County Homes Closed: 25+ Experience: 5 years
	Nancy Serving South Riverside County Homes Closed: 283+ Experience: 20 years
	Sergio Serving South Riverside County Homes Closed: 122+ Experience: 10 years
	Christy Serving Ventura County Homes Closed: 50+ Experience: 6 years
	Debbie Serving Ventura County Homes Closed: 105+ Experience: 5 years
	Deborah Serving Ventura County Homes Closed: 550+ Experience: 23 years
	Deborah Serving Ventura County Homes Closed: 82+ Experience: 7 years
	Dee Dee Serving Ventura County Homes Closed: 87+ Experience: 7 years
	Gregg Serving Ventura County Homes Closed: 172+ Experience: 8 years
	Michele Serving Ventura County Homes Closed: 47+ Experience: 7 years
	Zane Serving Ventura County Homes Closed: 550+ Experience: 20 years

Where are buyers getting the biggest discounts?

While the number and speed of price reductions is certainly interesting information (to some), what really matters to folks out there in the market right now is the size of price reductions. Better yet, how receptive are sellers to accepting an offer below their asking price?

Let’s get down to the nitty gritty. Where are buyers currently getting the biggest discount off the asking price in Los Angeles County? Our goal in sharing this data is to help potential buyers to know which neighborhoods are softer in terms of sale price discounts off list price, to better equip you when making an offer, and help you know where to look for potential bargains.

In the charts below, we have taken all sales data from the last two months in Los Angeles County and sorted it by zip code. We calculated the overall difference between the sale price and the list price. Note that this reflects the final list price, after all price drops in the listing. Any zips with fewer than ten sales are excluded from the top and bottom ten rankings, but interested readers may download the full data summary in Excel format (xls).

Here are the top ten zip codes with the largest overall discount:

Five of the ten zip codes with the largest discounts had average list prices well north of $1 million. Only two came in with average list prices below $400,000—93591 (Palmdale), and 90016 in LA.

Here are the ten zip codes with the smallest discounts:

77 of the 220 zip codes we ranked came in with discounts under 2%, indicating that either buyers are more willing to pay asking price or sellers in those regions are better at pricing their homes appropriately to the market in the first place.

Several neighborhoods in LA actually had an average sale price that was higher than the final list price, with the largest difference coming in Lynwood (90262). Only one of the top 10 zip codes that are selling for low discounts or over asking had an average list price above $400k (90041).

In fact, looking at the overall data, there is a definite trend of homes in neighborhoods with lower average prices selling closer to asking price. Keep that in mind if you’re thinking of making a below-list offer.

Of the 8,914 sales we tracked in the 2-month period, 191 homes sold for 20% or more off the asking price, while 2,780 homes sold for more than asking.