Case-Shiller: L.A. home prices down 26.7%

Housing prices in Los Angeles fell 26.7% in the year ending in August, as home prices continued to fall sharply across the Sunbelt, according to the widely watched Case-Shiller index of home prices. The national headline, from the Wall Street Journal:

The S&P/Case-Shiller home-price indexes, a closely watched gauge of U.S. home prices, showed prices in August continue to decline, with areas along the Sun Belt being hit hardest.

David M. Blitzer, chairman of Standard & Poor's index committee, noted there were "very few bright spots in the data." Among them is that the acceleration in decline from July to August was "only moderate."

The indexes showed home prices in 10 major metropolitan areas fell a record 17.7% in August from a year earlier and 1.1% from July. The drop marks the 10-city index's 11th-straight monthly report of a record decline.

More on L.A. prices: The rate at which prices are falling was slightly higher from July to August (1.8%) than it was from June to July (1.6%). The year-over-year price decline increased from 26.2% in July to 26.7% in August.

The steepest price declines remain concentrated in what one analyst has called the "sand states" -- Florida, Nevada, Arizona and California. Here are the cities suffering the largest year-over-year declines:

Phoenix 30.7%
Las Vegas 30.6%
Miami 28.1%
San Francisco 27.3%
Los Angeles 26.7%

A note about the Case-Shiller index: It does not translate prices into dollar figures, instead tracking prices from a base level of 100 in January of 2000. The index for Los Angeles is 189, indicating the city's housing is still much more expensive than it was eight years ago. The average for the 20 large cities tracked by Case-Shiller is 164.

Your thoughts? Comments? E-mail story tips to Peter Viles.

Comments

[latesummer2009]

Case Schiller runs a couple of months behind, yet is the best indicator of price trends. It will be interesting to see, what September and October look like after the Financial Meltdown accelerated into full swing.

Buyers are waiting on the sidelines, getting more and more familiar with foreclosure and distress sales.

http://www.westsideremeltdown.blogspot.com

[Tim K.]

""very few bright spots in the data"

THIS is the biggest problem. The perception that falling house prices is BAD. Falling house prices are a GOOD THING for the long term future of the economy - thinking higher home prices are higher is short-term gambling mentality. We need to leave that behind.

I'm happy home prices are falling, but it irks me to no end that most of the media still act like the gambling heyday we just went through were good times; the way things should be. They were not!

[Alejandro Salazar]

I think it will get worst before it starts going up. There is very shallow pool of qualified buyers with good down payment and they are buying forclosed houses. But most people are penyless. Even high earners. So unless they start to dole out no downpayment loans we are for a long decline and at best flat prices.

[CompaJD]

Any idea what the Case Schiller # for Los Angeles was in 1996? I think that's the number home prices are heading for.

[MalibuRenter]

I agree with Tim. The problem is not "few bright spots". That's the headline for current homeowners who are underwater. For current renters who want to buy, the headline is "Home prices getting closer to affordable", or "Home prices closing in on sustainable levels".

Or, "Home prices may soon reach levels where new buyers will not lose money"

[Chuck]

Getting warmer... But I'm not going to call bottom until a Westsider who makes over 200 thousand dollars a year can afford a place with a dishwasher.

[Mr.Bilko]

Yet, in spite of the huge declines, adjusted for inflation and using 1998 as the baseline, home prices are still, depending on your zip code, 25% to 50% overpriced in SoCal.

Using 1998 as the baseline for home prices, it will take one to two more years of 15% to 25% price declines on the Case-Shiller index before home prices are priced where they should be.

Riverside-San Bernadino-Corona and most of the inland empire is getting close to where they should be. Metro LA needs a 35% to 50% decline before prices match incomes.

[Rhea]

Oh, yes. Prices will be down for years to come. This is not something that can be corrected quickly. And prices needed to come down. Real estate was super-inflated.

[sithandra]

When this index falls to 120, I'll jump back in the market.

[sithandra]

When this index falls to 120, I'll jump back in the market.

[TakeFive]

Off Topic.

Just read about the layoffs at the times on LA Observed:

*Lauren Beale, editor of Real Estate and 29-year employee*

Didn't know if Lauren would be posting again. I know some of the regulars here gave her a hard time for intruding on "Pete's" blog. Perhaps we can offer her some encourgement to keep blogging (at least until a better paying gig comes along).

[bkl]

"Any idea what the Case Schiller # for Los Angeles was in 1996?"

August 1996 74.90
August 2008 189.18

We are now back to the level of March 2004, 186.55. We need a drop of 60% from today's level to get back to 1996. Note that 1996 was a bottom (February 1996 = 73.10). The Shiller index was 79.27 in August 1988, so 1996 was lower than 1988.

[sheila]

i imagine this will be the ONE time i agree with TakeFive on this blog (heh heh). let's keep lauren posting here...

[bill]

If you track US home sales at the national level; the peak was mid 2006 and prices have fallen to mid 2005 levels. Sales are up, especially in the foreclosure sector (ie.http://www.BuyMyHouseBeforeTheBankTakesIt.com) our economy has major issues to deal with and we may bottom out at 2004 levels.

[tew]

It's really hard to defend 189. The C-S LA should probably be in the 120 - 150 range, implying a drop from here of 20% - 37%.

This will be easily acheivable, since until now almost all of the correction has come from the extreme areas (in terms of distance from core LA and subprime and fraud activity). Those areas should be near the end of declines - maybe another 10-15%, but the higher end hoods should see about 25%-35% down from here.

[E]

Moronic quotes to be expected from home sellers.

"Case-Shiller never saw my house."

"He's looking only at the crappy ones."

"My house isn't like all the others."

"Show me a "Case-Shiller" house."

"I don't care what Case-Shiller says...I need to get at least $XXXXXXXX to pay off my HELOC"

[CompaJD]

Thanks bkl.

[tonylogan]

I am going to buy a mattress from Overstock (I see a web ad for them on this page).

Hopefully the revenue helps them keep Peter around.

[Erik]

While house price indexes have reported a downward trend in most MSA's, a new house price index, IAS360 (http://iasreo.com/ias360update.html), I've been following has been reporting small gains at the neighborhood and county level. So far this is the only house price index I've seen analyze at the neighborhood level.