Monday, January 9, 2012

Condo market pricing

October 2011 data for the S&P/Case-Shiller Home Price Indices were released on Tuesday December 27th, revealing monthly declines in condo prices in four of the metro areas – Boston, Chicago, Los Angeles and San Francisco. The San Francisco index reported the largest decline, down 2.6%; in October versus September, but Chicago was close behind, down 2.5%.  The LA condo index fell by 1.7% and the Boston index by 1.6%. Condo prices in New York rose marginally, by 0.1%, in October, their fifth consecutive monthly increase, and are showing positive annual rates of change, up 0.5%.
With October’s report, Los Angeles condo prices have fallen 15 consecutive months. The index was down 8.2% in October 2011 versus October 2010, which is worst annual rate of the five markets covered by our indices, and hit a new crisis low in October 2011. San Francisco’s condo market is now down six consecutive months and also posted a new crisis low in October. Average condo prices in San Francisco are down 8.0% versus October 2010. Chicago prices are down 7.7%.
The chart below compares the index levels for the five condo markets covered by the indices, rebased to 1995 = 100. The blue and red lines represent Los Angeles and San Francisco, respectively, where you can see the 15 month declining trend continued for these two markets in October. On average Los Angeles condo market prices are back to their mid-2003 levels; while San Francisco prices are back to mid-2002 levels.
S&P/Case-Shiller Condo Price Indices. Sources: S&P Indices and Fiserv.

On a relative basis the New York condo market is the most stable, as the table below highlights. New York condo prices were the only ones up on both a monthly and an annual basis in October.
The chart below illustrates the differences between New York, Los Angeles and Sand Francisco over almost 12 years. The green line clearly shows the New York condo market is the best relative performer coming out of the recent crisis.  Condo prices are still up over 102% versus January 2000.  By comparing the green, grey and orange lines, you can see that the New York condo market has been fairly stable over the past three years and has been on an upward trend since January 2011; whereas the California markets continue to weaken. The LA condo market has fallen by 40.8% since its July 2006 peak; the San Francisco market has fallen by 35.6% since its October 2005 peak; but the New York market has only fallen by 12.8% from its February 2006 peak.
S&P/Case-Shiller Home and Condo Price Indices. Sources: S&P Indices and Fiserv