Reader feedback: L.A. price declines are actually easing
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A couple of readers argue this morning -- pretty convincingly -- that today’s Case-Shiller report on home prices shows that the steepest declines in prices in Los Angeles are behind us. In other words, they argue I was incorrect to state, as I did, that price declines in Los Angeles ‘have accelerated dramatically in recent months.’ (I cited statistics showing the annual price decline in Los Angeles increasing from 16.5% in January to 24.5% in May.)
Then came this e-mail:
In the local angle, you noted accelerating declines in Los Angeles using year-over-year change. Here is the actual Case-Shiller data for LA, with the month-to-month declines to the right: May 2007 263.19 -0.06% June 2007 262.12 -0.41% July 2007 260.84 -0.49% August 2007 258.07 -1.06% September 2007 254.79 -1.27% October 2007 249.50 -2.08% November 2007 240.43 -3.64% December 2007 233.03 -3.08% January 2008 224.41 -3.70% February 2008 214.83 -4.27% March 2008 207.11 -3.59% April 2008 202.52 -2.22% May 2008 198.59 -1.94% While the year-over-year declines will continue to grow for a few more months (assuming next month is a bigger decline than .41%, the next month .49%, etc.), you can see that the monthly rate of change is actually decelerating after peaking this winter. The national rate is decelerating as well.
With funny money mortgages out of the system, and home sales picking up nicely in the harder hit areas (Sacto, the IE, low-income parts of OC), I’d guess the deceleration trend will continue, and eventually turn positive sometime in ’09. The year-over-year data won’t likely turn positive until 6 months or so after that.
A second e-mailer made the same points, writing, ‘It could therefore be argued that the decline has flattened, which could be indicative of the market bottoming out.’
-- Peter Viles
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