The Breakdown

Explaining Southern California's economy

Case-Shiller: Los Angeles housing prices gain in September but pace slows

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The latest numbers show Los Angeles home prices increased in September.

The S&P/Case-Shiller index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The September figures are the latest available.

The September Case-Shiller index, the most highly regarded set of numbers on the U.S. housing market, shows home prices increased 3 percent over September 2011, the eighth straight month of price increases.  But for L.A. the story is a bit subdued.

The Los Angeles housing market got absolutely crushed during the financial crisis. At this stage, the city could use more robust price appreciation.

From August to September, prices in L.A. moved up 1 percent, which was slightly worse than August's 1.3 percent. The month-over-month number hasn't been higher than 2 percent on the plus side since May. 

For what it's worth, these numbers closely parallel what's going on in San Diego and Las Vegas. 

There are two ways of looking at the latest Case-Shiller index, which is made up of a 10- and 20-city composite of prices and is widely considered the gold standard when it comes to determining the health of the U.S. housing market. 

On the one hand, what we're seeing nationally and in L.A. is price stability. The market has formed a solid bottom. Prices have recovered to levels last seen in fall of 2003. From this basis, a true recovery can commence.

On the other hand, you could easily conclude that a trend of peppier price appreciation that we were seeing at the beginning of the year has slowed. This makes sense, as the spring and summer selling season are now over, for Case-Shiller purposes (the index lags the market by two months).

This could actually be good news in Southern California — we've been seeing a price bubble here in certain areas, driven by low interest rates and limited supply colliding head on with surging demand. But it also signals that there's some lingering weakness in the market that we still haven't worked through.

There's no argument, however, that the L.A. housing market looks a lot better than it did a year ago.

Follow Matthew DeBord and the DeBord Report on Twitter. And ask Matt questions at Quora.

With contributions from KPCC Wire Services

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