Home-price index continues free fall

http://www.signonsandiego.com/news/business/20080528-9999-1b28housing.html

Home-price index continues free fall
San Diego metro area's March total down 20.5%
By Roger Showley
UNION-TRIBUNE STAFF WRITER
May 28, 2008

An important home-price indicator was down a record 14.1 percent in March compared with a year earlier in metro areas around the country and down 20.5 percent in San Diego, Standard & Poor's reported yesterday.

The S&P/Case-Shiller Home Price Index for San Diego has dropped for 30 straight months on a month-by-month basis and 20 straight months year over year. “The steep downturn in residential real estate continues,” said David M. Blitzer, Standard & Poor's index committee chairman, in a statement. “There are very few silver linings that one can see in the data.”

Unlike measures of median prices, Case-Shiller looks at the change in prices, property by property, over time to try to estimate the change in values of similar properties in a particular market.

The San Diego index, set at 100 in January 2000, now stands at 185.44, down from the peak 250.34 in November 2005. That means that at the peak homes were worth 2½ times their 2000 value but have since fallen back 25.9 percent to today's level.

San Diego's index is nearly back to where it was in December 2003. The index for March declined 2.3 percent from February, compared with a drop of 3.6 percent from January to February.

DataQuick Information Systems, which uses a different methodology to track prices, has reported similar trends. The median price for all homes in January 2000 was $219,000, the peak was $517,500 in November 2005 and the April median was $400,000, or 22.7 percent below the peak.

Case-Shiller's numbers showed that Las Vegas had the biggest year-over-year decline of the 20 metro areas tracked, down 25.9 percent; followed by Miami, down 24.6 percent; Phoenix, down 23 percent; and Los Angeles, down 21.7 percent. San Diego ranked fifth. These areas fell the most largely because they rose the most in the early-2000s boom, Case-Shiller said.

James Hamilton, an economist at the University of California San Diego, called the Case-Shiller findings “pretty serious” but “not mysterious.”

“There is still a very big overhang of unsold homes on the market,” Hamilton said. “That's going to bring the house price down.”

The San Diego Association of Realtors most recently said that more than 18,300 homes were listed for sale earlier this month, an eight-month supply at current sales rates.

Hamilton said prices are likely to keep falling, but probably not to their 2000 levels.

Marney Cox, an economist at the San Diego Association of Governments, predicted the Case-Shiller index for San Diego will drop about 25 points to around 160 before bottoming out – roughly a 35 percent drop from peak to trough.

“That's not too bad,” since prices still would be 60 percent higher than in 2000, Cox said.

In a separate report from the U.S. Commerce Department, seasonally adjusted sales of new homes in April rose for the first time in six months but were still near their lowest level in 17 years. The increase was 3.3 percent to 526,000 sales, up from 509,000 in March, the weakest pace since April 1991.

The increase was largely propelled by a surge of 41.7 percent in the Northeast, followed by 8.3 percent in the West and 5.8 percent in the Midwest. The South was down 2.4 percent.

Figures are not released for states or cities, but DataQuick previously reported San Diego's new-home sales in April at 334, up 4.7 percent from March but down 52.7 percent from April 2007. The numbers are not seasonally adjusted or annualized.

Roger M. Showley: (619) 293-1286; roger.showley@uniontrib.com