San Diego Housing Market News and Analysis
Yet Another Bad Month for the Case-Shiller HPI
Submitted by Rich Toscano on February 26, 2008 - 7:26pm
The Case-Shiller HPI numbers for December were released today. The low-, mid-, and high-priced tiers were respectively down 3.8%, 3.3%, and 3.1% from the prior month. The aggregate index was down 3.4%. The pace is picking up for the correction on the high-end -- December represents the first monthly decline of over 2% (let alone over 3%) for that tier.
The tally for calendar year 2007 was: -23.1% for the low tier, -16.0% for the middle tier, -8.6% for the high tier, and -15.0% overall.
From their respective peaks through December, the low, mid, and high tiers were down 26.3%, 21.0%, and 13.1%.
My estimate for the aggregate December decline was pretty close -- my guess (which is simply based on the 3-month moving average of the detached size-adjusted median) was 3.3% vs. the actual 3.4% decline. From the November 2005 peak through December 2007, San Diego home prices in aggregate were down 19.1%. Below is the aggregate index since the peak, with the orange bit denoting the January estimate.
Factoring in inflation, the real price decline has of course been even more brutal:
Yet despite the severity of the price declines, real home prices are still well above their levels as of the peak of the 1990 bubble.
As I'm fond of pointing out, the high tier's apparent resilience less to do with nice neighborhoods' alleged invulnerability than with the fact that low-priced homes overshot fair value by a lot farther. Homes of all stripes remain seriously overvalued and thus vulnerable to substantial further decline. I'll get more into this topic soon when I have a chance to update some of the long-term valuation charts.
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