The Most Splendid Housing Bubbles in America: Biggest Price Drops since Housing Bust 1. Record Plunge in Seattle (-3.9%), Near-Record in San Francisco (-4.3%) & Denver. Drops Spread Across the US

Big drops in San Diego, Los Angeles, Dallas, Portland, Phoenix, Boston. Prices fell faster than they rose? Certainly not. Oops.

By Wolf Richter for WOLF STREET.

This is the first month of this cycle that the S&P CoreLogic Case-Shiller home price index, which lags the reality on the ground by 4-6 months, shows declines in home prices in all regions. of the index.

In Seattle, the month-over-month drop was the steepest on record (-3.8%). In San Francisco, the month-over-month fall (-4.3%) was the third-largest on record, surpassed only by the worst two months of the housing crisis 1 in 2008. In San Diego (- 2.8%), Los Angeles (-2.3%), Phoenix (-2.1%) and other metropolises, the falls were the worst since the housing crisis 1. And the declines are spreading through the country to other metropolises, including Dallas, Boston, Washington DC and Las Vegas.

These are serious drops for Case-Shiller Home Price Indexwhere each month is a three-month moving average that smooths out month-to-month variability.

Today’s release of the index was for “August”, which is the three-month average of closed home sales that were registered in public registers in June, July and August. Due to the time lag between when a transaction is completed and when the “closed sale” is recorded on the public record, the “August” timeframe roughly covers transactions completed from May through June. During this period, the average 30-year fixed mortgage rate reached the 6% range. Today, we’re at 7%, and the mortgage bankers are exhausted.

Home prices in the San Francisco Bay Area fell 4.3% in “August” (three-month moving average of June, July and August) from July, the third steepest fall on record, surpassed only by the two slightly steeper falls during housing crisis 1 in 2008 The fall in August was an acceleration of declines in July (-3.5%) and June (-1.3%).

The index fell 8.9% from the peak. During these three months, the index plunged faster (-35 points) than prices had climbed during the last three months of the peak (+27 points). Real estate prices are falling faster than they had risen? No way, impossible. Oops.

This turn of events reduced the year-over-year gain to +5.6% from +24% earlier this year, unwinding only the latter stages of the ridiculous spike of the past two years so far. The index is now at its lowest since January.

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

In the Seattle metro, real estate prices plunged 3.9% in August, the largest month-over-month drop on record, in addition to the 3.1% drop in July and the 1.9% drop in June. The index fell 8.6% from the peak.

In the last three months of the peak, the index climbed 33 points; in the first three months of the decline, the index plunged 36 points, as San Francisco tumbled faster than it peaked. The index is now at its lowest since January. The year-over-year gain narrowed to +9.9% from +27% earlier this year.

The Case-Shiller index uses the “sales pair” method, comparing sales for the current month to those of the same homes sold previously. Price changes within each pair of sales are incorporated into the metro index, and adjustments are made for home improvements and other factors (methodology). By following the variation of the dollars needed to buy the same house over time, the index is a measure of house price inflation.

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

The index is down 5.9% from the peak and has moved at a symmetrical speed in the last three months of the peak. That reduced the year-over-year gain to 12.7% from 29% earlier this year.

The current index value of 403 for San Diego means home prices have risen 303% since January 2000, when the index was set at 100. Based on the increase since 2000, San Diego was the most splendid real estate bubble in America, but has now fallen under Miami (+309%) and Los Angeles (+305%).

In metro Los Angeles, real estate prices fell 2.3% in August compared to July, the biggest drop since Housing Bust 1, after falling 1.6% in July and 0.4% in June. This reduced the year-over-year price increase to +12.1%, from +23% a few months ago. The index is down 4.3% from the peak.

Home prices in metro Denver fell 2.3% in August compared to July – the second largest drop on record after January 2009 – after the 1.4% drop in July and the 0.1% drop in June.

The index fell 3.7% from the peak, halving the year-over-year gain to 12.0%.

Home prices in Portland metro fell 1.9% in August, after the 1.1% drop in July, and the 0.1% drop in June, after a ridiculous peak.

The index fell 3.1% from the peak, narrowing the year-over-year gain to +8.6% from +19% earlier this year.

In the Dallas Metro:

  • Month on month: -2.3%, after the -0.4% drop in July.
  • Year on year: +20.2%, compared to +30% earlier this year.
  • From peak: -2.3%.

In the Phoenix subway:

  • Month on month: -2.1% after -0.2% in July.
  • Year on year: +17.1%, compared to +32% earlier this year.
  • From peak: -2.3%.


In the Washington DC subway:

  • Month on month: -15%, after the 0.7% drop in July.
  • Year on year: +7.4%, compared to +13% earlier this year.
  • From peak: -2.2%.

In the Boston subway:

  • Month on month: -1.2% after -0.3% in July.
  • Year-on-year: 11.4% versus +15% earlier this year.
  • From peak: -1.5%.

Las Vegas Metro:

  • Month on month: -1.3% compared to July’s record.
  • Year on year: +17.5%, compared to +28% earlier this year.
  • From peak: -1.3%.

Tampa Metro:

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

Miami Metro:

  • Month-over-month: -0.1% from July’s record high.
  • Year on year: +28.6%, compared to +34% earlier this year.
  • From peak: -0.1%.

In the New York subway:

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

The New York City subway has seen house price inflation of 175% since January 2000, based on the Case-Shiller index value of 275. The remaining cities in the Case-Shiller index at 20 cities (Chicago, Charlotte, Minneapolis, Atlanta, Detroit and Cleveland) have experienced less house price inflation and do not qualify for this illustrious list of the hottest housing bubbles. But all posted month-over-month declines in August.

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