Local home prices were down 24.9 percent at the end of January compared to their level a year earlier, according to the most recent Standard & Poor's home price index released this morning.
The county's drop from the peak crossed the 40 percent line for the first time with this index. Prices in the January index were down 40.8 percent from the November 2005 market peak.
Even with that drop, San Diego prices remain about 48 percent higher than they were in January 2000, before the six-year bonanza when prices zoomed upward 150 percent.
Like in November, the highest of the index's three tiers in January showed the sharpest monthly drop, according to a seasonally adjusted version of the numbers.
Prices in the highest tier (homes sold for more than $424,184) slipped 2.8 percent between December and January.
That beat the 1.2 percent decline for the middle tier (homes from $288,350 to $424,184) and the 2.6 percent decline for the lowest tier (homes under $288,350). The low tier has most frequently shown the steepest declines in the market downturn.
The tiers sustained the following declines:
- Low tier: down 49.6 percent from June 2006 peak and 29.3 percent year-over-year
- Middle tier: down 38.6 percent from the November 2005 peak and 20.1 percent year-over-year
- High tier: down 32.5 percent from June 2006 peak and 20.9 percent year-over-year
This morning's New York Times report on the national index's record year-over-year decline quotes local real estate broker Jim Klinge:
The monthly Case-Shiller numbers examine only one segment of the real estate market, which happens to be the places where the boom was most frenzied. And even in those communities, agents argue that the report does not give a full picture of a market that can vary by neighborhood.
"Sales are up dramatically," said Jim Klinge, an agent in San Diego. "There’s a group of buyers that need housing more than they need to pay attention to the doom and gloom headlines we see every single day."
Many of his buyers are young people who are backed financially by their parents. Mr. Klinge noted that all the sales were on the low end, which in San Diego means less than $500,000.
Still, he said, "We’re back off the ledge."
The effect of that activity to which Klinge refers in that story and in his blog may be captured in a future Case-Shiller index. The index lags by two months.
Klinge will participate in an upcoming voiceofsandiego.org real estate and economics forum you won't want to miss. Mark your calendars for April 23, 6 p.m. in Liberty Station at Building 176, Studio 106, 2445 Truxtun Rd.
A note on the Case-Shiller index: Local University of San Diego real estate professor Norm Miller said in a conference call yesterday that the Case-Shiller index, among others, overstates the extent of price drops in the real estate market and that a typical homeowner's price change is probably about 50 to 60 percent of what's shown in the index. Miller conducted the call with his co-principal of real estate analytics firm Collateral Intelligence.
David Blitzer, chairman of S&P's index committee, defended the indexes and the inclusion of distressed and foreclosure sales in them in a Reuters story about the conference call. Here's Blitzer:
If you only want to include cases where people hold out for the best price, you'll get a much happier index but it would not be an accurate representation of the market.