‘Weak Condo Prices in California’

September 14, 2011 / Russell Legato, Residential Property Analyst

Condo prices in Los Angeles and San Francisco areas continue to slide, according to the August 30th release of June 2011 data for the S&P/Case-Shiller Home Price Indices.

‘Weak Condo Prices in California’

“The LA index reported an average condo price decline of 0.5 percent in June versus May and the San Francisco index fell by 0.8 percent. This is occurring during a time of anticipated seasonal strength; and the data look worse if you view the markets over the prior year or so,” said Maureen Maitland, Vice President of S&P Indices.

Condo prices in LA have fallen in 11 of the last 12 reported months, leaving the index down 7.4 percent in June 2011 versus June 2010 and hitting a crisis low with June’s data.

Meanwhile, San Francisco’s condo market saw monthly declines in nine of those months, down 6.8 percent versus a year ago.

The S&P/Case-Shiller Home Price Indices cover five condo markets – Boston, Chicago, Los Angeles, New York and San Francisco.

Maitland said there was a general year-long decline, most notably in the last few months when the expectation is for seasonal strength in home prices.

On average these market prices are back to their mid-2003 levels. While not as weak as Chicago, these two markets appear to be weakening.

“The New York and Boston condo markets are about 165-170 percent above those levels, meaning the average condo can still sell for more than 2 ½ times what it did in 1995,” Maitland said, citing the Index.

Los Angeles and San Francisco are about 125-130 percent above their respective 1995 levels. Chicago is seeing average condo prices only 43 percent above their levels of 16 years ago.

June’s monthly home and condo price data showed that both California markets were weaker than the other three MSAs. California home prices grew by less than 0.5 percent in June, and condo prices fell in both markets. Boston, Chicago and New York saw relatively healthy increases in both markets over the month.

Over the past 11 years, New York homes and condos never saw the price appreciation that Los Angeles did in the 10 years leading up to the market peak.

“However, once the markets turned in 2007, the New York condo market was, and still is, the best relative performer,” Maitland said.

The Index further showed that “New York condo market has been largely stable over the past two years; whereas the Los Angeles market is still weakening.”

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