Case-Shiller: Rate of LA Home Price Drops Continues to Slow

Let’s check in on 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. – January data is released in March).

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

January 2009
Month to Month: Down 2.9%
Year to Year: Down 25.8%
Change from Peak: Down 39.2% in 28 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 (September 2003).

The pattern of decreasing year-over-year drops that we saw in November and December’s data continued in Los Angeles for January, with year-over-year price drops decreasing by 0.6 percentage points. It will be interesting to keep an eye on this data and see if the trend continues.

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.

Home prices in Los Angeles have fallen nearly as far in the 28 months since their peak as they have down in San Diego in 38 months. Of the seven markets Redfin services, price drops here have easily been the fastest.