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The San Diego Case-Shiller Index for May is out.

I don’t know how much it matters, but they have two measurements – seasonally-adjusted, and non-seasonally adjusted.  Here are the recent troughs and peaks:

What does it mean? We had a price bump last year, and since then we’ve given back about half of the gain. From my perspective, pricing remains under pressure mostly from fraudulent short-sale listings, and when they hit a neighborhood, they hit hard. But other than those, we’re just bumping along.

The Case-Shiller Index for April wasn’t as gloomy as predicted, and offered the usual expertise:

“In a welcome shift from recent months, this month is better than last – April’s numbers beat March”, says David M. Blitzer, Chairman of the Index Committee at S&P Indicies.  “However, the seasonally adjusted numbers show that much of the improvement reflects the beginning of the Spring-Summer home buying season.  It is much too early to tell if this is a turning point or simply due to some warmer weather.”

Is he suggesting that warmer weather might cause people to pay more for a house?  Normally we’ll see sales increase during the “spring/summer selling season”, but do prices go up too?

They said that the “seasonally-adjusted numbers” reflect that April’s improvement in the index was due to normal seasonal increases, but it’s hard to notice any calendar trends in San Diego’s Case-Shiller Index after the recent downturn.  

It dropped 37 months straight, and a whopping -42%, from April 2006 to April 2009, and has been bumping around since.  The index is blended over three months, so the monthly rate of change isn’t as obvious:

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The monthly changes in the index are so small that these charts just give us longer-term pricing trends.

Is there a better time of year to buy or sell a home?

Theoretically, you would think that more of the elective sellers would try to sell during the spring/summer, warm weather or not – people believe that it’s the season to sell. 

With more of those better-quality homes selling, there should be an uptick in pricing around springtime, but it depends on the quality blend.  With today’s lower sales counts, there is more chance that a bulk of inferior properties could get dumped in any month, and potentially skew pricing downward even during the “season”.

Link to the S&P Case-Shiller Index data here.

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San Diego’s Case-Shiller Index changes:

Feb. to March:  -0.8% (seasonally adjusted = -0.9%)

March to April:  +0.4% (seasonally adjusted = -0.09%)

1-year change:  -4.3%

2-year change: +7.0%  (April, 2009 was the trough for non-seasonally-adjusted index)

As CR pointed out yesterday, there are now several home pricing indicies.

The one developed by FNC attempts to overcome the problems with the repeat-sale measurements – here is their explanation:

One possible approach to address this dilemma is to consistently use all of the housing stock for each period. To do this it is necessary to have a market price for each house in each period.

Since all the properties do not sell, a model must be created to price all of the major attributes of a house (i.e. location, gross living area, age, lot size, bedrooms, bathrooms, etc.) and then compute an estimated market price for each property. The value of each of the attributes is estimated based on the observed properties that do sell over an extended window.

This approach allows all of the properties to be included in the index which then provides a stable broad based index for each period. Models of this type are referred to as hedonic models and have been used for many decades to estimate the value of a property. The limitation to using this approach for an index has been the general lack of availability of characteristic information about residential properties.

FNC has developed a hedonic index based on the data collected from public records and blended with data from appraisals. The addition of the appraisal data provides the physical property characteristic data that is often missing from public records.

Here is their San Diego Residential Price Index, which has a familar shape to it:

People want to know about homes prices going up or down, but it’s difficult to measure.  Because of the diversity of homes selling in different areas, there isn’t one clear, concise tool to judge the general pricing trends, so try to take a little from each.

CoreLogic does an index of repeat sales that is similar to the Case-Shiller Index.

Here is the history of their Monthly HPI over the last 24 months for San Diego:

The graph below shows how the distressed sales impact these repeat-sale indicies. 

While we have seen plenty of long-time owners get foreclosed due to serial refinancing, most distressed sales are homes that were purchased around the peak of the market.  With those, the second sale in the repeat set is naturally much lower than the non-distressed sets – that’s why the homeowners bailed out!

When you take out the distressed sales, there is a somewhat-narrow band of +/- 5% for non-distressed pricing since October, 2009. 

If the lenders/servicers continue to throttle the sales of distressed homes, we can probably expect the overall inventory to be thin, and non-distressed pricing to be in this same range.

The Case-Shiller Index for March was released today – quotes from David Blitzer:

This month’s report is marked by the confirmation of a double-dip in home prices across much of the nation,” David Blitzer, chairman of the index committee at S&P Indices, said in a statement. “Home prices continue on their downward spiral with no relief in sight.” 

While the overall numbers in the S&P/Case-Shiller Home Price Indices for March are down and disappointing, the pattern is not uniform.  A few cities — Washington DC and two in California — San Francisco and San Diego — remain above their recent lows. At the other end of the scale, Detroit is about 30% below its level of January, 2000.

“What we’ve seen over the last few months despite the decline in prices is we’ve gone back to the old ‘location, location, location’ story instead of everything going down at once,” Blitzer said. “California has clearly broken out of the pattern it was in, which is a big plus.”

Though there had been hopes in the industry that prices were troughing and ready to turn higher, the latest trends show little hope in sight until later this year or early in 2012, he added.

“Everybody’s now keeping their fingers crossed for 2012 and wondering whether people just don’t want to own homes anymore,” he said.

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The official month-over-month reading for San Diego is -0.8 (March/February), which is better than the previous -1.3 (February/January). 

Here are the peak-to-trough-to-now numbers:

Peak: 250.34

Trough: 144.43 in April 2009 (-42.4% from peak)

Latest: 153.88 in March 2011 (-38.5% from peak)

How accurately does the Case-Shiller Index reflect reality?  They don’t count any repeat sales within six months, so flippers are excluded for the most part, and they weight the rest.  Here’s a summary of the index here, which notes how it can direct consumer mood and behavior.

But the C-S Index does make for great sound bites, which apparently is all we have time to digest.

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For those interested in the North SD County Coastal region, here is the comparison of May SFR sales:

We still have today’s sales to add, plus the usual 10% for late-reporters, so we should be close to last May’s number of sales too.

On a day where 2 billion people are engrossed with the kisses of  two British 20-somethings, let’s shine the spotlight on San Diego’s own King of Graphs, Rich Toscano.

Here’s an excerpt and two of the graphs from his post, click here for the full story:

It is interesting, however, that the low-priced tier of the index dropped as much as it did.  After weathering the recent fall/winter lull better than the other tiers, the low-priced homes were spanked for 2.7 percent in February.  The middle tier was down 1.4 percent and the high tier by .5 percent for the month.

This looks like somewhat of a catch-up move which reverses the low tier’s previous strength and gets it more into line with recent price changes in the overall market.

The San Diego Case-Shiller Index since 1989:

What has been the historical change in sales between March and April?

These are the MLS detached sales and average $/sf for NSDCC – La Jolla to Carlsbad:

There are always late reporters, and the last couple of days of the month are the strongest – but it looks like this year we could break the recent trend of April having more sales than March.

Could be due to lack of inventory, OPTs, falling demand, and/or buyer disgust?