On January 27, Standard & Poor’s most recent set of monthly Home Price Indices were published through November 2008. As was widely reported in the press, the data indicate a decline in home prices in all metropolitan areas covered by the survey. Also reported in the data, lower cost homes continue to see the greatest price declines, suggesting lower income neighborhoods continue to bear the brunt of falling real estate values.
Looking at the change over the past two years, housing prices in the lower cost tier (bottom third of the housing market) have declined 34% while the prices of houses in the higher cost tier (top third of the housing market) have declined by 20%, on average, across metropolitan areas. The decline in housing prices does appear to be moderating somewhat. At 27%, the average rate of decline among metropolitan areas in the past year for homes in the lower tier was well below the two-year rate. Similarly, since 2007 the price index for high tier homes fell at a lower 16%.
Some of the steepest declines have been in cities such as Los Angeles, Las Vegas, Phoenix and San Francisco. In comparison to the average metropolitan area, all of these cities saw larger declines (approximately 40%) in prices for lower tier homes since 2006. For example, in San Francisco where the low-tier includes homes priced under $342,467 the metro area experienced a price decline of 40% while its high-tier homes, priced above $591,729, experienced only a 15% decline. Meanwhile Las Vegas experienced a similar price decline of 41% in its low-tier housing, encompassing homes priced under $186,882. Las Vegas’ high-tier homes (home priced above $253,184) experienced a decline of 29%.
Other cities, such as Portland and Seattle, also on the west coast, saw much smaller declines in low-tier housing prices. Portland saw low-tier housing prices, those priced below $232,305, fall 10%, while high-tier homes, those priced above $325,253, saw nearly equal losses of 12%. Seattle’s housing market displays similar trends to Portland, with little difference in the price declines between low-tier housing and the high-tier housing.
While these figures are an indication of declining wealth and neighborhood instability, under current economic conditions and in most communities, falling prices do not equate with increased affordability for residents. These declines are occurring as part of a significant downturn in the economy in which employment and incomes are also declining.
Standard & Poor’s housing price data is collected from 17 regional metropolitan areas: Atlanta, Boston, Chicago, Cleveland, Denver, Las Vegas, Los Angeles, Miami, Minneapolis, New York, Phoenix, Portland, San Diego, San Francisco, Seattle, Tampa and Washington DC. The index is a repeat sales index, which measures changes in the sale price of the same homes over time.
The data can be found here: http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,5,0,0,0,0,0.htm.