Thursday, September 27, 2007

Case-Shiller update

Here's the S&P/Case-Shiller monthly index for Los Angeles, and their original ten-city composite, through July.

Los Angeles is now down 4.8% from the peak in September 2006. The national index is down 4.6% from its peak in June 2006. In contrast, Los Angeles fell 27% from the last peak in June 1990 to the low in March 1996.

We're still looking in the rear-view mirror, though; these sales closing in July preceded the mortgage turmoil from August on.

For more and bigger graphs see Paper Economy.

8 comments:

Anonymous said...

I thought you're covering west side. What does the rest of the LA has to do with it? Why not take the stats from the valley than, it's only over the hill?

Westside Bubble said...

Both because we're part of LA, and from my previous post about the close correlation between the LA Case-Shiller index and Santa Monica lot value, I find this meaningful to track.

Looks like lot value north of Montana has dropped back below $2M, from the price cut on 15th Street.

NeedleBrainPopsPsychBubble said...

NOM lots are less than $2 million already...?

Standard 50 x 150 tear down lots were selling for $2.3-$2.4 million recently. So that's -10+%.

After watching these markets for 15 years, I thought NOM would be slower to decrease because SO VERY VERY MUCH spec money has flowed in. Almost every block has at least one major construction, sometime up to 4 spec houses being newly constructed on one block!

Its like KB homes has infiltrated the NOM neighborhood, and built tract mega mansions haphazardly wherever some older couple sold their bungalow.

But for whom? At $4 Million?

I guess the money can flow out as fast as it can flow in.

So much for sticky pricing...

Are foreclosures next? I give it 9 months, and bank owned REOs will start showing up. Then, the free falling will be apparent.

I guess minus 50% in 18 months time.

dwr said...

"Almost every block has at least one major construction, sometime up to 4 spec houses being newly constructed on one block!"

Exactly, NOM has had more spec building than just about anywhere, which is why IMO NOM is going to have price drops greater than most can imagine.

Mikey said...

I think the rest of L.A. is quite material. Unless you're 100 years old, and bought years ago, the Westside is a moveup neighborhood, not a first-time buyer's neighborhood. If the less expensive places lose ground, moving up is not possible.

There is one gigantic difference between L.A. generally and the Westside that should be noted. The Westside is also the land of dinks, so all those income ratios are off.

Westside Bubble said...

Needlebrain, in the area I've been tracking (Lincoln to 14th or so), lot value only crossed $2M this year, and seems to have turned back down with 704 15th reducing its price to $1,990K (previous post).

But for whom? At $4 Million?

A number of these have been sitting unsold (previous post). This should reduce the demand for new tear-downs.

Are foreclosures next? I give it 9 months, and bank owned REOs will start showing up. Then, the free falling will be apparent.

Wonder how soon at least some sellers will get serious about price cuts? Carrying costs on a spec gotta be huge.

WarChestSM said...

The spec issue is huge. They are the primary drivers of "lot value" because they are the ones to bid up the prices of the few tear downs that come on market. If the top line growth slows and you see price cuts on the completed specs, then who is going to be shelling out over $2 million for plots of land?

There are two specs that recently came onto market in 90402. They are both on 23rd and both showing early October as completion of construction dates. One is listed for $5 million and one for $4.8 million. These will be interesting to watch.

333 14th has been on market for a long time and is still asking $4.7 million. 230 21st place was asking $4.4 and looks to be off the market (don't think it sold?)...heard it was for lease at $17K/month. And then the one spec serious about selling was 239 14th which cut from $4.5 million to $4 million but still hasn't sold.

Oh and then there is the spec on Yale just south of Montana. Been for sale for a LONG time but can't find a buyer...a newer addition is the one on 25th just south of Montana...and then of course, our good friend Idaho flip which still is lingering as well.

Anonymous said...

Re:spec houses, Pac Palisades seems better than NoMo. New houses will be on the market soon, Housing market around Thanksgiving / Holiday seasons will be good indicator for the 2008 bubble