Is Housing Starting to Slow Down? Perhaps…

I try not to obsess over the housing market. Yet, it’s a hard thing to avoid when my plan is to buy a house this year in Los Angeles county. Housing here in sunny California has been on an upswing these past 18-months that has had me freaked out. Our budget is quite low and the more prices increase, the less likely it will be that we can find a house in our price range.

But…finally I got some “sort-of” good news. I’ve been using the S&P/Case-Shiller chart to figure out if prices are going to continue to climb, or go down. The most recent data for Los Angeles is that prices dipped .15%, which is an improvement over the continuous climb over the past several months. The only drawback to using this information is that the data is two months behind. But hey, it’s something!

Nationwide, prices also went down, but this is just an average. Some cities, like Denver and Miami, saw an increase that is higher than the peak of the housing boom. I don’t really understand all the details of this chart. Technically speaking, this is just measuring year-over-year appreciation with a starting point of January 2000 (explained below). Los Angeles just happens to have one of the highest index levels, and our chart is like a roller coaster and not a steady incline. In contrast, according to the Denver chart which shows a steady incline, increases for that city are much higher now than they were in 2006.

Then there’s the index level number. According to the description, the index number is compared to a base number of 100 in January 2000. So the Los Angeles index number 226 translates into an appreciation of 126% since January 2000. Using Denver as my example again, though their chart is climbing, their index number is 158, which means homes have appreciated 58% since January 2000.

Los Angeles has seen the greatest appreciation since January 2000, even when compared to San Francisco, New York City, or Boston. All I can say is that it must be the weather! Argh……