L.A. housing bubble still nation’s biggest
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The Case-Shiller Home Price Index shows prices in Los Angeles fell 8.8% from October ’06 to October ‘07, but that L.A.’s housing market is still holding on to more gains than any other big city in the nation -- in other words, L.A.’s local housing bubble is still the nation’s most inflated.
Or, if you don’t believe there’s a housing bubble, you would say L.A. is still sitting on the biggest price gains in the nation since 2000.
Regardless of how you see it, prices in L.A., according to Case-Shiller, are declining at an accelerating pace.
Headline from Reuters via CNBC: ‘Prices of existing U.S. single-family homes recorded their biggest annual drop in October, suggesting the housing slump is far from over, a national home price gauge released Wednesday showed.’
Case-Shiller measures home prices by metro area. Here’s a selection of metro areas, and their price index declines from Oct. ’06 to Oct. ‘07:
Miami -12.4%
Detroit -11.2%
San Diego -11.1%
Las Vegas -10.7%
Phoenix -10.6%
L.A. -8.8%
Case-Shiller uses an index in which prices in 2000 were given a value of 100. Thus, you can measure which cities have the highest price increases since 2000 -- even after recent declines. That’s the list on which L.A. is first:
L.A. 249.5
Miami 244.4
Washington 226.7
San Diego 217.0
Las Vegas 208.7
More on Case-Shiller: L.A. prices peaked in late summer and early fall of 2006, at an index of 273.9, reached in July and again in September. In July 2006, when prices first peaked, Case-Shiller was showing a year-over-year price increase of 11.2%.
Month-to-month prices turned negative in October 2006, and have been negative ever since. The price change in the most recent two-month period, September ’07 to October ‘07, was the biggest month-to-month decline measured, at 2.1%.
Year-over-year prices turned negative in February of 2007, and have accelerated every month since then. Case-Shiller clearly shows the L.A. market in October was in a period of rapidly accelerating price declines:
Month L.A. index month-to-month % year-over year %
Jan. 07 268.7 -0.5% +1.0%
Feb. 07 266.6 -0.8% -0.4%
Mar. 07 264.6 -0.8% -1.4%
Apr. 07 263.4 -0.5% -2.2%
May 07 263.1 -0.1% -3.3%
June 07 262.1 -0.4% -4.1%
July 07 260.8 -0.5% -4.8%
Aug. 07 258.1 -1.1% -5.7%
Sept. 07 254.8 -1.3% -7.0%
Oct. 07 249.5 -2.1% -8.8%
Note: Those of you looking for clarity on which statistic measuring home prices is the best, or most accurate, will probably end up disappointed. There are numerous ways to measure housing prices, and I report as many of them as possible. Three widely publicized reports -- by the National Association of Realtors, the California Association of Realtors, and DataQuick -- track home sales by month, and calculate the median home sales price each month, and use that as a yardstick. I happen to like the Case-Shiller index, which measures price changes by using ‘matched pairs’ of sales -- looking for homes that sold twice over a period of time, and calculating the percentage price change for each pair, and then using those numbers to calculate an overall market trend.
Your thoughts? Comments? Insights? E-mail story tips to peter.viles@latimes.com