Last October 31, the S&P Dow Jones Indices released their latest data from Case Shiller, the leading measure of US Home Prices, and the results nationwide were impressive. Basically, home prices continue to forge ahead throughout the US and that's reflected here in the South Bay as well.
Oh sure, there are occasional glitches in our local markets - most recently in El Segundo, which has experienced tremendous tech-fueled appreciation the past few years, and the townhomes/condo segment in Manhattan Beach - but, overall, the local housing market, like our local economy, remains strong.
It is worth noting that the Case Shiller index results are for the month of August (Case Shiller is always two months in arrears). That data shows a 5.9% annual rate of appreciation nationwide for existing single family homes, according to their 20-city composite index.
In California, the numbers were higher across the board, with Los Angeles and San Francisco coming in at 6.1% and San Diego beating both those cities with a 7.8% annual rate of increase.
Locally, we here at Real Estate Edge have our own median sales data but we don’t use the complicated Case-Shiller methodology; instead, we simply took the median sale price for the MLS-reported sales (which, obviously, doesn’t include off-market sales) of both new and existing properties for the most recent 12-month period and compared that to the median price for the previous 12 months. Also, our sales data for October is actually more current than Case Shiller’s August numbers (although their September numbers are due out this coming Thursday, November 30).
Below is a chart that summarizes our data for the local housing markets. The yearly figures are based on median prices for the 12 months ending in October for the years shown.
|Manhattan Beach||Single Family||$2,200,000||$2,243,000||10.1%|
|Hermosa Beach||Single Family||$1,746,250||$1,900,000||8.8%|
|N Redondo Beach||Single Family||$899,000||$975,000||8.5%|
|S Redondo Beach||Single Family||$1,249,500||$1,325,000||6.0%|
|El Segundo||Single Family||$1,289,500||$1,268,250||-1.68%|
As for the Case Shiller numbers for August, all 20 cities in their Composite Index were up year-over-year. Indeed, David Blitzer, Chairman of the Index Committee, proclaimed, “Home price increases appear to be unstoppable.”
So what’s the reason for the continuing improvement in home prices?
Blitzer continued, “The ongoing rise in home prices poses questions of why prices are climbing and whether they will continue to outpace most of the economy. Currently, low mortgage rates combined with an improving economy are supporting home prices. Low interest rates raise the value of both real and financial long-lived assets. The price gains are not simply a rebound from the financial crisis; nationally and in nine of the 20 cities in the report, home prices have reached new all-time highs.”
But Blitzer does sound a cautionary note.
“Home prices will not rise forever,” he avers. “Measures of affordability are beginning to slide, indicating that the pool of buyers is shrinking. The Federal Reserve is pushing short term interest rates upward and mortgage rates are likely to follow over time, removing a key factor supporting rising home prices."
It will be interesting to see if Case Shiller's September home sales data show a continuation of the current upward trend. Certainly, if one were to extrapolate from our local October figures, that may very well turn out to be the case.