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The Most Splendid Housing Bubbles in America: Biggest price drop since Housing Bust 1. Record plunge in Seattle (-3.9%), Near-Record in San Francisco (-4.3%) and Denver. Drops scattered across the United States




Major falls in San Diego, Los Angeles, Dallas, Portland, Phoenix, Boston. Are prices going down faster than they had gone up? Never. Oops.

By Wolf Richter for WOLF STREET.

This is the first month in this cycle that the S&P CoreLogic Case-Shiller Home Price Index, which lags the ground reality by 4-6 months, shows home price declines in all metro areas in the index.

In Seattle, the month-on-month drop was the steepest ever (-3.8%). In San Francisco, the month-over-month plunge (-4.3%) was the third steepest ever, surpassed only by the worst two months during Housing Bust 1 in 2008. In San Diego (-2.8%), Los Angeles ( ̵[ads1]1; 2.3%), Phoenix (-2.1%) and other metros, the plunges were the worst since Housing Bust 1. And the decline is spreading across the country to other metros, including Dallas, Boston, Washington DC and Las Vegas.

These are serious declines for the Case-Shiller Home Price Index, where each month is a rolling three-month average that irons out month-to-month variation.

Today’s release of the index was for “August”, which consists of the three-month average of sales of closed homes that were entered in public registers in June, July and August. Because of the delay between when a deal is made and when the “closed sale” is recorded in public records, the “August” timeframe roughly covers deals made in May through June. During that time, the average 30-year fixed mortgage rate reached 6%. Today we are at 7% and the mortgage bankers are freaking out.

In the San Francisco Bay Area, home prices fell 4.3% in “August” (three-month moving average of June, July and August) from July, the third steepest plunge ever, surpassed only by the two slightly steeper plunges below the depth of housing bust 1 in 2008. The plunge in August was an acceleration of the falls in July (-3.5%) and June (-1.3%).

The index has fallen 8.9% from its peak. During these three months, the index plunged faster (-35 points) than prices had increased during the last three months of the peak (+27 points). Are house prices falling faster than they had risen? No, impossible. Oops.

This event reduced the year-over-year gain to +5.6%, from +24% earlier this year, and so far only ended the final phase of the ridiculous peak of the past two years. The index is now at its lowest level since January.

The Case Shiller Index for “San Francisco” covers five counties in the nine-county San Francisco Bay Area: San Francisco, part of Silicon Valley, part of the East Bay, and part of the North Bay.

The Most Splendid Housing Bubbles in America: Biggest price drop since Housing Bust 1. Record plunge in Seattle (-3.9%), Near-Record in San Francisco (-4.3%) and Denver.  Drops scattered across the United States

In metro Seattle, home prices fell by 3.9 percent in August, the biggest month-on-month drop on record, on top of July’s 3.1% plunge and June’s 1.9% drop. The index has fallen 8.6% from its peak.

During the last three months of the peak, the index rose by 33 points; in the first three months of the downturn, the index plunged 36 points, as San Francisco eased off faster than it had risen. The index is now at its lowest level since January. The year-over-year gain shrank to +9.9% from +27% earlier this year.

The Case-Shiller index uses the “sales pair” method, comparing sales in the current month to when the same homes sold in the past. The price changes within each sales pair are integrated into the index for the subway, and it is adjusted for housing improvements and other factors (methodology). By tracking the change in dollars needed to buy same houses over time, the index is a measure of housing price growth.

San Diego metro home prices fell 2.8% in August, the biggest month-over-month drop since Housing Bust 1, following the 2.5% drop in July, and the 0.7% drop in June, to the lowest level since January.

The index is down 5.9% from the peak and wound down at a symmetrical rate in the last three months of the peak. This reduced the year-on-year gain to 12.7%, from 29% earlier this year.

The current index value of 403 for San Diego means that home prices have increased by 303% since January 2000, when the index was set at 100. Based on the increase since 2000, San Diego used to be the most amazing housing bubble in America, but has now fallen below Miami (+309%) and Los Angeles (+305%).

In the Los Angeles metro, home prices fell 2.3 percent in August from July, the steepest drop since housing bust 1, after falling 1.6% in July and 0.4% in June. This reduced the year-on-year price increase to +12.1%, from +23% a few months ago. The index is down 4.3% from its peak.

Denver metro home prices fell 2.3% in August from July – the second steepest fall on record after January 2009 – following the 1.4% fall in July and the 0.1% fall in June.

The index has fallen 3.7% from its peak, halving its year-on-year increase to 12.0%.

In Portland metro, home prices fell 1.9% in August, after the 1.1% fall in July, and the 0.1% fall in June, after a ridiculous increase.

The index has fallen 3.1% from its peak, cutting its year-over-year gain to +8.6%, from +19% earlier this year.

In the Dallas metro:

  • Month over month: -2.3%, following the -0.4% decline in July.
  • Year over year: +20.2%, down from +30% earlier this year.
  • From the top: -2.3%.

In the Phoenix metro:

  • Month over month: -2.1% after -0.2% in July.
  • Year over year: +17.1%, down from +32% earlier this year.
  • From the top: -2.3%.


In the Washington DC metro:

  • Month over month: -15%, following the 0.7% decline in July.
  • Year over year: +7.4%, down from +13% earlier this year.
  • From the top: -2.2%.

In the Boston metro:

  • Month over month: -1.2% after -0.3% in July.
  • Year over year: 11.4% from +15% earlier this year.
  • From the top: -1.5%.

las vegas subway:

  • Month over month: -1.3% from the record in July.
  • Year over year: +17.5%, down from +28% earlier this year.
  • From the top: -1.3%.

Tampa Metro:

  • Month over month: -0.5% from record in July
  • Year over year: +28.0%, down from +36% earlier this year
  • From peak: -0.5%

Miami metro:

  • Month over month: -0.1% from record in July.
  • Year over year: +28.6%, down from +34% earlier this year.
  • From peak: -0.1%.

In the New York subway:

  • Month over month: -0.5% from record in July
  • Year over year: +12.3%, down from +15% earlier this year
  • From peak: -0.5%

The New York metro has experienced 175% home price growth since January 2000, based on the Case-Shiller Index value of 275. The remaining cities in the 20-City Case-Shiller Index (Chicago, Charlotte, Minneapolis, Atlanta, Detroit and Cleveland) have experienced less housing price growth and does not qualify for this famous list of the most amazing housing bubbles. But all orders declined month-on-month in August.

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