Great Falls in San Diego, Los Angeles, Dallas, Portland, Phoenix, Boston. Did prices drop faster than they shot up? No way. Oops.
By Wolf Richter by WOLF STREET.
This is the first month this cycle that the S&P CoreLogic Case-Shiller Home Price Index, which lags reality by 4-6 months, shows declines in home prices across the board. index metropolitan areas.
In Seattle, the month-over-month drop was the steepest on record (-3.8%). In San Francisco, the month-over-month drop (-4.3%) was the third steepest on record, exceeded only by the two worst months during the 2008 housing crisis 1. In San Diego (-2.8%), Los Angeles (-2.3%), Phoenix (-2.1%) and other metro areas, the declines were the worst since the housing crisis 1. And the declines are spreading across the country to other metro areas, including Dallas, Boston, Washington DC and Las Vegas.
These are serious declines for the Case-Shiller House Price Indexwhere each month is a three-month moving average that removes variability from month to month.
Today’s index release was for “August,” which is the three-month average of closed home sales that were registered in public records in June, July and August. Due to the delay between the time a deal is made and the time the “closed sale” is recorded in the public records, the “August” period roughly covers deals made between May and June. During that time, the average 30-year fixed mortgage rate reached the 6% range. This day, we are at 7% and the mortgage bankers are exhausted.
In the San Francisco Bay Area, home prices fell 4.3% in “August” (three-month moving average of June, July and August) since July, the third steepest drop on record, second only to the two slightly steeper drops during the depth of the housing crisis 1 in 2008. The drop in August was an acceleration of the falls in July (-3.5%) and June (-1.3%).
The index has fallen 8.9% from the peak. During those three months, the index plunged faster (-35 points) than prices soared during the last three months of the spike (+27 points). Are house prices falling faster than they skyrocketed? No way, impossible. Oops.
This turn of events reduced the year-over-year gain to +5.6%, from +24% earlier this year, undoing only the final stages of the ridiculous peak of the last two years so far. The index is now at the lowest level since January.
The Case Shiller Index for “San Francisco” covers five counties out of the nine counties of the San Francisco Bay Area: San Francisco, part of Silicon Valley, part of the East Bay, and part of the North Bay.
In the Seattle metro, home prices plummeted 3.9% in August, the largest monthly drop on record, in addition to the 3.1% drop in July and the 1.9% drop in June. The index has fallen 8.6% from the peak.
During the last three months of the spike, the index soared 33 points; during the first three months of the slump, the index plunged 36 points, just as San Francisco recovered faster than it had risen. The index is now at the lowest level since January. The year-on-year gain fell to +9.9% from +27% at the beginning of this year.
The Case-Shiller index uses the “paired sales” method, comparing sales in the current month to when the same homes were previously sold. Price changes within each pair of sales are integrated into the meter index and adjustments are made for home improvements and other factors (methodology). By tracking the change in dollars needed to buy the same housing over time, the index is a measure of house price inflation.
In the San Diego metro, home prices fell 2.8% in August, the biggest month-on-month drop since Housing Bust 1, after July’s 2.5% drop, and June’s 0.7% drop, to the lowest level since January.
The index is down 5.9% from the peak and unwound with symmetric speed over the last three months of the peak. This slashed the year-over-year gain to 12.7%, from 29% earlier this year.
The current index value of 403 for San Diego means that home prices have shot up 303% since January 2000, when the index was pegged at 100. Based on the increase since 2000, San Diego used to be the housing bubble most splendid number 1 in the United States, but has now fallen below Miami (+309%) and Los Angeles (+305%).
In the Los Angeles metro, the price of housing fell by 2.3% in August compared to July, the steepest drop since the housing crisis 1, after falling 1.6% in July and 0.4% in June. This sharply reduced the year-over-year price gain to +12.1%, from +23% a few months ago. The index is down 4.3% from the peak.
In the Denver metro, home prices fell 2.3% in August since July, the second steepest drop on record after January 2009, after July’s 1.4% drop and June’s 0.1% drop.
The index has fallen 3.7% from the peak, cutting the year-over-year gain in half to 12.0%.
In the Portland metro, home prices fell 1.9% in August, after the 1.1% drop in July, and the 0.1% drop in June, after a ridiculous spike.
The index has fallen 3.1% from the peak, trimming the year-on-year gain to +8.6%, from +19% earlier this year.
On the Dallas subway:
- Month to month: -2.3%, after the fall of -0.4% in July.
- Year over year: +20.2%, down from +30% at the beginning of this year.
- From the peak: -2.3%.
In the Phoenix subway:
- Month on month: -2.1% after -0.2% in July.
- Year over year: +17.1%, down from +32% at the beginning of this year.
- From the peak: -2.3%.
In the Washington D.C. subway:
- Month on month: -15%, after the 0.7% drop in July.
- Year over year: +7.4%, down from +13% at the beginning of this year.
- From the peak: -2.2%.
in the boston subway:
- Month on month: -1.2% after -0.3% in July.
- Year over year: 11.4% from +15% at the beginning of this year.
- From the peak: -1.5%.
las vegas subway:
- Month to month: -1.3% from the record of July.
- Year over year: +17.5%, down from +28% at the beginning of this year.
- From the peak: -1.3%.
Tampa Subway:
- Month over month: -0.5% from record high in July
- Year over year: +28.0%, down from +36% at the beginning of this year
- From Peak: -0.5%
Miami Subway:
- Month to month: -0.1% from the record of July.
- Year over year: +28.6%, down from +34% at the beginning of this year.
- From Peak: -0.1%.
In the New York subway:
- Month over month: -0.5% from record high in July
- Year over year: +12.3%, down from +15% earlier this year
- From Peak: -0.5%
The New York subway has experienced 175% home price inflation since January 2000, based on the Case-Shiller Index value of 275. The remaining cities in the 20-city Case-Shiller Index (Chicago, Charlotte, Minneapolis, Atlanta, Detroit, and Cleveland) have all experienced lower home price inflation and do not qualify for this illustrious list of the most splendid housing bubbles. But all posted month-over-month declines in August.
Do you enjoy reading WOLF STREET and want to support it? Using ad blockers, I fully understand why, but do you want to support the site? you can donate I appreciate it immensely. Click on the mug of beer and iced tea to find out how:
Would you like to be notified by email when WOLF STREET posts a new article? Sign up here.
