August 2011 data for the S&P/Case-Shiller Home Price Indices were released on Tuesday October 25th and we saw further weakening in condo prices in the California metro areas. The LA index reported a decline of 0.7% in condo prices in August versus July, and the San Francisco index fell by 0.2%. The Boston index fell by 0.3% in August; but this is after having been up a cumulative 6.1% over the prior three months; whereas the California markets were down each of the same prior months.
These price declines are occurring at the end of the spring/summer period for seasonal demand; and the data look worse over the prior 12 months. In addition to August’s decline, condo prices in LA fell in 11 of the prior 12 reported months, leaving the index down 7.2% in August 2011 versus August 2010 and hitting a crisis low in August 2011. San Francisco’s condo market saw monthly declines in 10 of those months and is down 9.0% versus August 2010, which is the second worst annual rate of the five markets covered by our indices; Chicago is down 9.6%.
The chart below compares the index levels for the five condo markets covered by the indices, rebased to 1995 = 100. The blue and red lines represent Los Angeles and San Francisco, respectively. The year-long declining trend continued for these two markets in August. On average these market prices are back to their mid-2003 levels.
California home and condo markets are relatively weak when compared to the other MSAs, as the table below highlights. California home prices and condo prices all fell in August. As discussed above, Boston’s market also saw declines but this was coming off of a healthy spring in that city. Chicago and New York saw relatively healthy increases in both markets over the month. In addition, New York condo prices were up 2.3% in August versus the same month in 2010.
The chart below illustrates the differences between New York and Los Angeles over the past 11 years. With an August level of 204.13, the New York condo market is the best relative performer coming out of the recent crisis. Condo prices are still up over 104% versus January 2000. Comparing the green and grey lines below, you can see that the New York condo market has been fairly stable over the past two years and has been on an upward trend since January 2011; whereas the Los Angeles market has weakened further. The LA condo market has fallen by 39.4% since its July 2006 peak; whereas the New York market has only fallen by 11.8% from its February 2006 peak. While peaking at different times in 2005-2007, Boston, Chicago and San Francisco have fallen by 11.5%, 28.2% and 33.0%, respectively; making Los Angeles and San Francisco the two markets with the highest declines from their relative peaks.