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Tract homes in Santa Clarita, California. The Case-Shiller index for July saw Los Angeles and the U.S. continue a positive trend for prices.
The July Case-Shiller index has just been released and once again, while the news for Los Angeles is positive, it isn't spectacular — and a bit of a letdown after the city's housing market picked up some momentum earlier this year. Prices improved 1.3 pecent in July, but that has to be contrasted with a 1.7-percent uptick for June, a 2.2-percent gain for May, and an 1.5 percent boost in April.
Year-over-year, L.A. was basically flat with a 0.4-percent gain.
In terms of the Case-Shiller index, L.A. continues to hang out in the center of the 20 cities the index tracks. It's July performance nearly matches the index's 20-city composite of +1.6-percent for the period.
Nationally, every city in the Case-Shiller index saw prices move up in July — as well as in June. Some cities also saw big hikes from last August, with Phoenix taking the lead, at more then 16 percent. It seems pretty clear at this point that housing in the U.S. has established a bottom. Case-Shiller notes that prices have now recovered to 2003 levels, for the cities the index tracks.
L.A. home prices are down from last April, but they've been trending up modestly for the first part of 2012.
The April Case-Shiller Index came out yesterday and contained good news for most of the 20 cities that the index covers and some indications of a decent trend for L.A. in the first quarter of 2012. Home prices were still down in L.A. compared with this time last year — down 3.6 percent in fact — but over the past few months, prices have been edging up.
Not as much as in Phoenix, which rose by 8.6 percent from April 2011. But the decline wasn't as severe as in Atlanta, which dropped by 17 percent.
In L.A., February-March saw a tiny 0.1-percent increase after a January-February month-on-month decline. But the March-April uptick was better: 1.5 percent. This could mean that prices are gaining a footing and could start to build on their gains. Sales, after all, have been improving in L.A. But prices haven't yet caught up. This could change as foreclosures and short sales (when the lender agrees to accept a sale for less than is owed on the mortgage) move through the system.
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A realtor sign advertises a bank-owned house for sale in California. The March Case-Shiller index suggests that Los Angeles may finally have hit a true bottom for prices.
The Case-Shiller index is out for March 2012. The bottom line is that price declines across the indices — which tracks housing prices data in two groups, across 10 and 20 U.S. cities — are moderating. Or seem to be moderating. This means that many cities may finally be scraping along a true bottom for housing prices, setting the stage for a recovery that can sustain itself.
This is from the S&P/Case-Shiller press release:
“The regions showed mixed results for March. Twelve of the cities saw average home prices rise in March over February, seven saw prices fall and one – Las Vegas – was flat. The Composites were largely unchanged with the 10-City down only 0.1% and the 20-City unchanged. After close to six consecutive months of price declines across most cities, this is relatively good news. We just need to see it happen in more of the cities and for many months in a row. Since we are entering a seasonal buying period, it becomes very important to look at both monthly and annual rates of change in home prices in order to understand the broader trend going forward.”
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A bank foreclosure sale sign is posted in front of townhomes on August 12, 2010 in Los Angeles, California.
Home prices in the California cities are comparatively healthy despite the state's high unemployment rate, because the markets tracked by the index are close to key job centers such as Hollywood and Silicon Valley and are also near the ocean -- where overbuilding was relatively constrained. The index does not track prices in California's Central Valley or the Inland Empire, where housing is still weak.
For background, the unemployment rate in Cali is just south of 12 percent. The latest Case-Shiller index, which tracks housing prices in major cities, showed modest month-over-month declines from August to September 2011, in Los Angeles, San Diego, and San Francisco.
Modest, but still headed down. So price deflation in the California housing market continues. And nobody seems to know where the floor is, at least in the Case-Shiller cities.