L.A. home prices down 21.7% in last year

The latest Case-Shiller report on home prices shows Los Angeles prices fell by 21.7% over the last year and were falling at an even faster rate this spring.

Nationally, Case-Shiller shows prices falling by 14.4% in 20 large American cities (see note below), by far the steepest rate of decline in the 20-year history of the index.

"There are very few silver linings that one can see in the data. Most of the nation appears to remain on a downward path," said David Blitzer, chairman of S&P's index committee.

The Case-Shiller report, which analyzes repeat sales of the same homes in large U.S. cities, shows the housing slump continues to be most pronounced in large western cities. The five biggest annual declines in price in March:

Las Vegas   down 25.9%
Miami        down 24.6%
Phoenix     down 23.0%
Los Angeles down 21.7%
San Diego    down 20.5%

Los Angeles continues to show accelerating annual price declines, although the month-to-month decline did slow a bit -- from 4.3% in the January-to-February period to 3.6% in the February-to-March period.  Still, the 3.6% decline in the most recent monthly period makes Los Angeles the third-weakest housing market in the nation by that measure, with only Miami (-4.5%) and Las Vegas (-4.4%) losing more value.

Note on "20 large cities": An earlier version of this post reported, incorrectly, that the Case-Shiller index tracks home prices in the "20 largest cities." It does not, as Bruce Webb points out in his comment below. It tracks home prices in 20 cities, but they are not the largest in America.

Your thoughs? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: Associated Press

Comments

[Jack Spector]

Hooray for those of us who sweated it out in rentals while the rest of the world went crazy.

Home values aren't really dropping, though. They are returning to the prices that they should always have been.

[Matt]

"There are very few silver linings that one can see in the data. Most of the nation appears to remain on a downward path,"

Very few silver linings? Really? How about for people who have been working their butts off and saving money, and are finally seeing light at the end of what has been a very very overpriced tunnel? Just because thousands of people were dumb enough to buy what they could not afford, they do not get my sympathy. No bailouts. Not corporate. Not personal. These prices have not gone down nearly enough for many of us. Sorry, this is what reality looks like. Remember? I know, it's been a while.

[Fred]

The train keeps on rolling...

[Matt]

It is not surprising that the markets seeing the biggest declines are the very markets that saw the biggest increases for five years straight. Most of these markets had increased in value about 300% since 2000-2001. The fact remains that we have seen a fundamental increase in real estate prices in most all markets that is with us to stay just as increased oil prices are. Scary, as the poor get poorer.

[Rick P.]

I guess "less regulation" in the financial markets, especially when they relate to "sub-prime mortgage-backed securities", is not really a good thing, is it?

[JRG]

It's a good thing; might bring housing prices down to realistic afford ability, not speculation prices. Keep falling.

[David Raether]

Oh, no!

House prices are beginning to head in a direction that makes them afforable for hard-working people who pay their bills on time!

This is terrible news!

Wait...

Okay, I'm back.

I pulled myself together after sobbing bitterly for five minutes that there is a chance that middle class people could eventually afford a house in Los Angeles.

[Mozart]

Zip codes in coastal San Diego have been appreciating for several months now. It's always darkest before the dawn and as San Diego went into this tail spin first, so parts of Los Angeles will also emerge shortly.

Not everyone is meant to own. Median incomes do not necessarily relate to median home prices. The CS report is skewed because it shows a valid, but the whacked state of the current market activity; foreclosures and short sales. Who would sell right now? Only the truely distressed and I bet the non-foreclosure numbers are not nearly as bad as portrayed in the media.

Any home owner who can, will hold onto their property. This crowd may riot but I think there is some overshooting downwards right now. Some places should be cheap because they are terrible places to live.

The bulk of the bubble happened in places that were so cheap that they invited amateur investors to speculate.

[peteviles]

Bruce Webb writes, "Case-Shiller does not in fact track the "20 largest cities" ...

Thanks, Bruce, you are correct, sir. I've fixed the post accordingly. Thanks for pointing that out.

[Raul Garcia]

Mr. Snyder:

Thank you very much for sharing your insight and knowledge.

[nelcisco]

Raul Garcia-
I see your point, Iv'e been wandering for a long time how non-Lakers or non-'A' list actors were surviving in L.A. thats why I left. But I have to correct you, L.A. has become a third world city in culture, not economically,
L.A. by itself is somewhere around 7 or 8 economic powerhouse in the globe, thats huge for one city or even for a county.hardly a third world economy.

[Nancy]

Al Brock,

Not sure about Vegas, but Phoenix gets it's water from the Colorado River (via the Central Arizona Project), which runs through the Eastern side of the state.

In fact, Southern California has been taking advantage of Arizona's water supply for years: http://en.wikipedia.org/wiki/Colorado_River_Aqueduct

[Rando]

Here, Here. I have no idea why this is bad news. EVERYONE said the house prices were going up way too fast, now it's just coming back down to HOPEFULLY a reasonable level. When you make a 150k and can't afford to buy a house, something is wrong.

[Annoyed]

So unbelievable that illegal immigrants and "foreigners" become part of this debate, as if they're the reason why the rich have screwed us all over. Open your eyes and THINK for a change. Blame the right people.

[ken6000]

LA is far from a 3rd world place, as anyone who's recently visited Manila, Lagos, Port-au-Prince or Dhaka can tell you. LA is a world-class, dynamic, thriving city with all that implies. Housing prices here are simply not sustainable at 300 percent increases in a five or ten year period. This is the reckoning for those who looted the inflated equity in their homes and filled their driveways with Hummers, their cabinets with $500 bottles of wine or whatever they did. It is also the reckoning for those who leveraged themselves way beyond logical means to get into those bloated stucco boxes everywhere. Sadly, it is also hitting those who barely could get into a small house in an established area. Those are the people I feel for in this market. Darwinism be damned... go live on a rock somewhere in the middle of the sea if you're unwilling to participate in at least basic compassion for those who are actually getting hit here. I am a homeowner who is not in trouble, still I say, bring the prices down another 20% or so, and we'll see more solid, hard-working people buy homes. Maybe this will shut down the speculative "home as commodity" market... for a few years anyway.

[Jeremy R]

"We continue to make progress in making homes more affordable. Hopefully the trend will continue and lawmakers don't intervene."

Lawmakers should intervene. They should regulate lenders by making them register their mortgage products in the same way that fund managers have to register with the SEC. Mortgage products need something similar to a prospectus. Their should be a national website that explains their mechanisms, risks, advantages, etc.

Also, soliciters should not be able to sell mortgages over the phone unless they give people a federal ID number, and a "prospectus" equivalent. Selling creative/funky refinancing schemes over the phone is like selling garbage bonds over the phone. It is not ethical, and should be heavily regulated.

Also, first time homebuyers with poor credit should be forced to take a 1 hour short online course on risks and money management.

The government should protect people. It shouldnt FORCE banks to require 20% down, it shouldn;t do bailouts or mess with interest rates in silly ways. It should't DIRECTLY control the free-market, but it should regulate it similar to the way the SEC regulates the stock market.

Many people knew what they were doing and got burned, but I am guessing 5-10% really did get burned, and that is not acceptable.

[Jeremy R]

"These prices have not gone down nearly enough for many of us. Sorry, this is what reality looks like. Remember? I know, it's been a while."

I hope SF goes back to 1998 prices. I 4 bedroom unattached home by the beach in SF for 400k sounds quite nice! 1998, Here we GO!!!!

Check zillow in places like Manhattan's East Village or SF's Richmond District circa 1997. You will be shocked. I hope prices come back to those levels!
Sadly, I doubt they will.

[Jeremy R]

Just checked Zillow.

A 1300 sq ft 3 bedroom 2 bath flat in SF, 2 blocks for golden gate park, 4 blocks from the beach was around 290k according to Zillow in 1997.

A very nice 1800 sq ft home on the Venice CANALS was 550k in 1997 (if you havent been to Venice Canals, go check em out)!!

Im sorry. I think homes are way over priced, but I have trouble believing that 1997 prices are ever coming back.

That same house on the Venice canals is selling for 2 million. I don;t think it will go too much below a million. Venice is just a different place now than it was then. There are so many new shops, residents, homes. Big money has relocated to urban areas.

Compton "may" fall to 1997 levels as the immigrants leave CA for AZ, IE, and middle America.

Different areas will drop at different rates, although ALL places will drop.

Median LA prices will probably fall to 2002 levels. Poor areas may go to 1999 prices while wealthy areas go to 2003 prices, and gentrified areas go to 2004 prices (depending on the success of gentrification and neighorhood improvement).

[seabuscuit]

Is it simply NEVER smart to put just 10% down? Does everyone agree that it is still to early to buy?
Seabuscuit

[Jeremy R]

"Is it simply NEVER smart to put just 10% down? Does everyone agree that it is still to early to buy?
Seabuscuit"

Buy in late '09 or later.

I would put 10% down if mortgage companies are willing to give you a respectable loan. Right now, saving markets are doing worse than mortgage interest rates, so 15% down might not be a bad idea. I would keep some of that downpayment in my own cash reserves instead of sticking it in my home loan.

If you are buying a condo, I would wait for a fire sale, or wait a LONG time. You don;t want to buy into an empty building.

[Wilson]

People who doubt prices will go back to 1998 levels need to consider all elements of the economy, not just housing prices.

Of course, if the job market is doing well, and the economy is fine, then there will be a ton of buyers for nice homes in West LA at 1998 prices. But historically, recessions cause great job losses, wage losses, and as a result, there are very few buyers of homes.

A friend, who is a Wall Street retail analyst, says the economy is so much worse than anyone can imagine--it's going to be one heck of a shakeout over the next few years.

Remember, it's all the elements of the economy that will combine to bring prime LA housing to 1998 prices:
--inflation
--high gas & energy prices
--food shortages and price increases
--job losses
--wage losses

[Laker]

Mozart wrote ,"...I bet the non-foreclosure numbers are not nearly as bad as portrayed in the media..."

The non-foreclosure number basically do not exist. They are NOT selling right now. The regular seller are simply waiting it out...hoping that prices will rebound and they could sell then.
I've heard some economists saying that if you need to sell your house in the next two years, now is actually the best time to do that. That is in the next 2-3 year prices will be sure less than today, and therefore sellers can get more dollars today than tomorrow.
I know it feels bad to get 20% less than what you could get last year for your house....however, it is much better than 40% less that you will get next year....
Sometimes it is better to get one bird in your hand than three on the tree....

btw: Where is shockg????? Hope everything is fine with him

[Rocker]

The amazing thing is, why so many people got it so wrong for so long time: home buyers, realtors, brokers, rating agencies analysts, global investors and goverment officials?!?

As a grown up, I'm embarrased to try to explain this to my 4th grader daugther, she's good in math and can understand all the math involved here.

We the bears at some point in time (2002-2004) were the 0.01% thinking and acting with the firm idea that RE was out of touch.

[Rocker]

In late 90's, some areas 1998 nominal prices = 1989 nominal prices.

We won't see the same nominal prices but probably some areas (really bad locations) probably will see 1989 real prices.

With al the inflation that we have had in the last years, currently we're at 2003 prices in real terms, according to calculated risk blog.

[Westside Bubble]

Graph of the latest Los Angeles Case-Shiller is at
http://westside-bubble.blogspot.com/
2008/05/march-case-shiller.html .