Index posts its biggest drop ever in U.S. home prices
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Home values in major U.S. cities continued to fall at a record pace in November, with Southern California posting some of the steepest declines in a national index released Tuesday.
Miami saw a 15.1% drop in November compared to a year earlier, the worst among 20 metropolitan areas in the Standard & Poor’s/Case-Shiller composite index. But San Diego was close behind with a 13.4% decline.
The November index of 10 metropolitan areas saw a year-over-year annual decline of 8.4%, the sharpest annual plunge since the index began in 1987. It was the second-straight record decline for the index, following a 6.7% drop in October.
The index shows that home prices in Los Angeles and Orange counties are now almost 12% below their peak month, which Case-Shiller places at September 2006.
That drop was close to the median sales price declines recorded by DataQuick Information Systems. The La Jolla-based firm reported the median price paid for homes in Los Angeles and Orange counties in December fell 10% from the previous year.
Unlike the DataQuick median sales figures, the Case-Shiller index does not include condominium units or new homes. The index compares the latest sales of individual houses to their previous sales. It screens out foreclosures and accounts for remodeling work and other variables that affect pricing.
From that information, an index number is created. The index is meant to be a benchmark of the housing market in the area, rather than a median sales figure. Instead of stating prices, the index uses a score measuring percentage changes, based on a score of 100 for January 2000. The November score for 20 cities of 188.8 means prices are 89% above January 2000 levels.
The S&P;/Case-Shiller index began with a comparison of 10 cities but has since expanded to a group of 20. November saw record declines in 13 of the 20 metro areas.
Robert J. Shiller, the Yale University economist who co-founded the index, called the November figures “another grim milestone in the housing market.”
Only three metro areas showed annual price gains -- Charlotte, N.C.; Seattle; and Portland, Ore.
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