Case-Shiller: San Diego Showing First Signs of Stabilization?

I apologize again for the multi-week radio silence here. We’ve revamped our data delivery to be able to better streamline the whole process, and from now on there will be a regular schedule of in-depth data in this space. For now though, it’s time 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. – November data is released in January).

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

November 2008
Month to Month: Down 2.3%
Year to Year: Down 25.8%
Change from Peak: Down 37.9% in 36 months

The following chart shows the San Diego HPI scaled such that the November 2005 peak is 100% on the y-axis. Data on the x-axis is scaled to display the last time (pre-peak) the San Diego HPI was at or lower than it was in the latest data (January 2003).

With last month’s drop in San Diego’s Case-Shiller HPI, prices have now effectively “rewound” nearly six years. Um, wow.

Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves, so you can compare San Diego’s performance to other areas across the country:

And here’s one more chart, in which I have lined 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.

One interesting piece of data that is not visible in these graphs is the fact that San Diego’s rate of year to year price drops actually declined in November, for the first time since the market’s peak. In October, the year to year decline was 26.7%, compared to November’s 25.8%. This could be the first sign of some kind of price stabilization here in SoCal. Of course, if price drops do continue to stabilize at this rate it will take until late 2010 before we do finally reach the bottom in home prices.

January 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 (saved in Excel 97-2003 .xls format by request). In order to keep from overwhelming you with charts, I am leaving out the top ten cities/towns/neighborhoods with the least reduced-price listings from the post, but you can still see that chart in the downloaded file.

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

Of the 37 cities/towns we ranked in San Diego County this month, 19 had price-reduced ratios of fifty percent or more. Encinitas and Coronado both made the top ten for the last three months.

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

40 of the 104 neighborhoods we ranked in San Diego County had a price-reduced ratio of fifty percent or more. Park West, Village, and Ocean Beach all made the top ten for the third month in a row.

For home buyers, cities and neighborhoods that consistently remain near the top of the list for price reductions may be a good place to potentially hunt for bargains. Once a home has been on the market a while, many buyers tend to overlook it, even though a price reduction or two may have brought it into a more desirable price range.

Biggest Discounts December Update

Let’s have an update on where buyers are currently getting the biggest discount off the asking price. This data should help potential buyers to know which neighborhoods are softer in terms of sale price discounts off list price, better equipping you when making an offer and helping you know where to look for potential bargains.

In the charts below, we have taken all sales data from the last two and a half months in Redfin’s San Diego coverage area 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).

FYI, ordinarily we would have posted this last week, but we had a slight snag in acquiring the data.

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

Coronado (92118) moved from the #2 spot last month to #1 this month, despite the discounts there dropping from 10.8% to 8.1%.

The overall discount for the San Diego area decreased significantly from 4.1% last month to just 1.9% this month, indicating either a decrease in the willingness of sellers to bargain with buyers, or an increase in the skill of sellers to set appropriate prices to begin with.

Here are the ten zip codes with the smallest discounts:

Of the 6,229 sales we tracked in the 3-month period, just 96 homes sold for more than 20% off the asking price, while 2,461 homes sold for more than asking.

As a whole, the trend in San Diego is currently moving toward smaller discounts for most neighborhoods. As we continue to watch this data we will be able to get a better picture of what sale-to-list discounts tell us about the overall health of the local real estate market.