Like home prices, condos prices end 2011 on a weak note

December 2011 data for the S&P/Case-Shiller Home Price Indices were released on Tuesday February 28th, revealing monthly declines in condo prices in all five of the metro areas covered by our indices – Boston, Chicago, Los Angeles, New York and San Francisco. The Chicago index reported the largest decline, down 4.8%, in December versus November. The San Francisco index was next, falling by 1.9%. Condo prices in Boston, Los Angeles and New York fell by 1.2%, 1.0% and 0.7% in November, respectively.

With December’s report, Chicago posted the largest annual decline,
-12.3%, with most of the weakness coming at the end of the year. Chicago condo prices fell in each month of September through December by a cumulative 11.5%. Los Angeles condo prices have fallen 17 consecutive months, were down 7.5% at an annual pace and hit a new crisis low in December 2011. San Francisco’s condo market was down eight consecutive months and also posted a new crisis low in December. Average condo prices in San Francisco are down 7.3% versus December 2010. Boston and New York prices showed annual declines of 2.4% and 0.2%, respectively.

The chart below compares the index levels for the five condo markets covered by the indices, rebased to 1995 = 100. The grey, blue and red lines represent Chicago, Los Angeles and San Francisco, respectively. Chicago is well below the other cities, showing that average condo prices are back to their early-2000 levels. On average Los Angeles condo market prices are back to their mid-2003 levels; while San Francisco prices are back to early-2002 levels.

On a relative basis the New York condo market remains the most stable, as the table below highlights. New York condo prices showed the most modest declines on both a monthly and an annual basis in December. As the table below indicates, Chicago is the weakest across both markets.

S&P/Case-Shiller Home and Condo Price Indices, comparative statistics

The chart below illustrates the differences between Chicago and New York condo and single-family homes over almost 17 years. The green line clearly shows the New York condo market is the best relative performer coming out of the recent crisis. New York condo prices are still up over 160% versus January 1995, whereas Chicago prices are up only about 30%. By comparing the green and grey lines, you can see that the New York condo market has been fairly stable over the past three years; whereas the Chicago market continues to weaken. The Chicago condo market has fallen by 36.2% since its September 2007 peak; but the New York market has only fallen by 15.4% from its February 2006 peak.

S&P/Case-Shiller Home and Condo Price Indices. Sources: S&P Indices and Fiserv

The chart below illustrates the differences between New York, Los Angeles and San Francisco over almost 12 years. As with the Chicago comparison above, the green line clearly shows the New York condo market is the best relative performer. By comparing the green, grey and orange lines, you can see that the New York condo market has been fairly stable over the past three years; whereas the California markets have largely weakened. The LA condo market has fallen by 41.9% since its July 2006 peak; the San Francisco market has fallen by 37.0% since its October 2005 peak; but, as said above, the New York market has only fallen by 15.4% from its February 2006 peak. Across all cities, however, both the single-family home and condos markets weakened as we ended 2011.

S&P/Case-Shiller Home and Condo Price Indices. Sources: S&P Indices and Fiserv

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