Home Prices Decelerate Nationally (And Locally)

Posted by Mike Michalski on Monday, September 16th, 2019.

    On August 27, S&P Dow Jones released the latest results for the Case-Shiller home price indices in the United States.  Those results for the month of June (Case Shiller is always two months behind) show that the annual rate of home price increases nationally was 3.1%, down from 3.3% in May.

     We like to look at Case-Shiller’s 20-city composite index which tracks home price changes in 20 major metropolitan areas (including Los Angeles).  That index posted a 2.1% annual gain in June, down from 2.4% the previous month.  Noteworthy, however, is the fact that the 20-city composite’s annual price appreciation has slowed substantially since May of last year when the year-over-year price gain was 6.5%. 

     Among the 20 cities, Phoenix is the new leader with an annual percentage gain of 5.8%, followed by Las Vegas (5.5%) and Tampa (4.7%).  All three California cities in the survey - Los Angeles (1.6%), San Francisco (0.7%) and San Diego (1.3%) - were well off their highs from last year.  And most surprising of all was former home price leader Seattle showing a year-over-year decline of –1.3%, the only metro area in the 20-city composite to see home prices go into the red on a year-over-year basis.

     “Home price gains continue to trend down, but may be leveling off to a sustainable level,” says Philip Murphy, Managing Director and Global Head of Index Governance at S&P Dow Jones Indices.  “The southwest (Phoenix and Las Vegas) remains the regional leader in home price gains, followed by the southeast (Tampa and Charlotte). With three of the bottom five cities (Seattle, San Francisco, and San Diego), much of the west coast is challenged to sustain YOY gains."

     But he also noted, "While housing has clearly cooled off from 2018, home price gains in most cities remain positive in low single digits. Therefore, it is likely that current rates of change will generally be sustained barring an economic downturn.”  

         Locally, here in the South Bay, the beach cities have been exhibiting both declining sales and declining prices of late (Note:  At Real Estate Edge, we don't use the Case Shiller index methodology of comparing paired sales of the same existing single family homes; rather, we look at all residential units, including condos and townhomes, both new and existing).

     Compare the year-over-year results for cumulative sales of single family homes in El Segundo, Redondo Beach, Hermosa Beach and Manhattan Beach.  Here, the median price for a total of 788 single family home sales in all four communities for the year ending on August 31, 2018, was $1,670,000.  But for the year ending August 31 of this year, there were 720 sales (a drop-off of –9%) and the median sale price declined to $1,630,000 (off –2.4%).

     Condos and townhome sales saw a similar result with a drop in year-over-year sales from 729 for the full 12 months ending on August 31, 2018, to 697 for the year ended this past August 31 (a decline of –4.4%)  while the median sale price fell from $1,065,000 to $1,037,000 (off –2.6%).

In a sea of red locally, the standout performer was single family homes in El Segundo, up 9.5%.  However, because of the small sample size (under 100 sales annually), El Segundo's numbers tend to jump around a bit.  

Single family home sales in Manhattan Beach, however, are another matter.  With a good sample size of roughly 300 sales a year, the median sale price is a reliable indicator and there the price increase data has been holding steadily positive.  For the 12 months ending last August 31, the median price increased 4.1%

A propos to the preceding factoid, we recently sold our listing at 1812 Elm Avenue, a 4-bedroom home in the Manhattan Beach Tree section (pictured below) for full price prior to coming to market! 
Sometimes the real estate gods smile upon you.


This entry was posted under Market Conditions, and South Bay Real Estate News.