Since we are in a seasonally strong period for home prices, it was a bit of a surprise to see condo prices fall in three of the five condo markets we cover with the S&P/Case-Shiller Condo Prices Indices.
Data through May 2011 showed declines in condo prices in Los Angeles (-0.1%), New York (-0.8%) and San Francisco (-0.5%). In addition, Los Angeles index level recorded a new cycle low with the release of May 2011 data. More in line with seasonal expectations, Boston and Chicago saw significant price increases over the month – up 2.6% and 2.9%, respectively – and, while still negative, moderate improvement in their annual rates. That said, Chicago’s market is still down 15.6% since May 2011, the worst recent performer of the five markets.
As we have discussed many times, for a true housing (or condo) recovery we need to see several months of increasing prices, large enough to shift the annual momentum into positive territory. In that vein, May’s data is disappointing for some of the markets. With its 0.1% decline, Los Angeles posted its 10th consecutive monthly drop and its annual rate of change has fallen deeper into negative territory (-7.5%). While San Francisco was up in March and April, May’s 0.5% drop brought its annual rate of change down to -5.4%. Although not as large, New York saw a similar pattern. On a monthly basis condo prices fell by 0.8%, and the annual rate deteriorated further to -3.0%.
Looking at broader trends, New York and Los Angeles condos have done a better job at retaining their value over the past decade. New York’s May index level of 194.67 means that average condo prices were still about 95% above their 2000 levels. Similarly Los Angeles has retained more than 75% of its respective value; whereas Chicago’s reading was only 108.14, or about 8%.
The next S&P/Case-Shiller release will be Tuesday, August 30 at 9 am.