Case-Shiller: Price Drops Still Slowly Moderating

It’s time for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). For the full source data behind this post, plus seasonally adjusted and tiered price data, hit the S&P/Case-Shiller website.

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. – April data is released in June).

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

April 2009
Month to Month: Down 0.1%
Year to Year: Down 20.0%
Change from Peak: Down 42.3% in 41 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 (July 2002).

Prices continue to decline in San Diego, and a 20% year-over-year drop is certainly nothing to sneeze at. However, it is defintely worth mentioning that the trend of decreasing magnitude of price drops in San Diego and LA is also continuing:

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:

To recap, we have seen the following interventions in recent months meant to boost the housing market:

• $8k first-time buyer tax credit
• 4.5% – 5% mortgage rates
• various moratoriums on foreclosures
• numerous federal programs encouraging loan workouts

The apparent result of this host of actions has been a flattening to very slight upticks seen in the chart above, in a month that is historically one of the strongest of the year for the real estate market. I guess you can color me underwhelmed.

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.

It’s been six months now since we first pointed out on these pages the sign of a possible bottom on the distant horizon for San Diego home prices. Things are definitely still heading in that direction, but it could easily be over a year before price drops finally hit that bottom.

June 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 38 cities/towns we ranked in the San Diego area this month, 12 had price-reduced ratios of fifty percent or more.

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

Of the 93 neighborhoods we ranked in the San Diego area this month, 12 had a price-reduced ratio of fifty percent or more. On average, the neighborhoods with more price reductions had noticably higher closed prices per square foot than those with fewer price reductions.

The general trend in San Diego looks to be heading slightly toward less price reductions, however every city and neighborhood is of course different. Some may be getting softer while others get tighter. Download the full spreadsheet to check where your neighborhood came in.

Biggest Discounts June Update

Let’s check in on our stats once again and find out where buyers are currently getting the biggest discounts off asking price. If you are a potential buyer, this will help you to know which neighborhoods may be softer in terms of sale price discounts off list price, and help you know where to look for potential bargains.

In the chart below, we have taken all sales data from last month in San Diego 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 areas 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 areas with the largest overall discount:

The overall discount stayed the same in June from our previous update in April, holding steady at 2.9%. Much of the top ten list also stayed the same. If you’re looking for sellers that might be more likely to accept lower offers, these might be a good place to search.

Here are the ten areas with the smallest discounts:

Twenty-six of the seventy-six zip codes we ranked actually came in with average sale prices above the list price.

Is the area you’re shopping not on either the top 10 or bottom 10? No problem, just download the full rankings in Excel format and hit the “FullSummary” sheet.

Of the 2,778 sales we tracked in the 1-month period, 234 homes (8%) sold for 10% or more off the asking price, while 488 homes sold for 5% or more above the asking price.