Another Month of Home Price Declines

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The S&P/Case-Shiller home price index for San Diego, which is the most accurate measure of aggregate single family home prices, declined 2.6 percent between February and March.

The high-priced index tier, which is composed of the most expensive one-third of homes that were sold during the period in question, was down but once again demonstrated relative strength. High-tier homes declined 1.2 percent for the month to end up down 18.0 percent from their June 2006 peak. The accompanying graph shows that the high tier has experienced a spring rally of sorts as the pace of price declines let up from previous months.

The middle tier of the index was down 2.3 percent for the month and 27.7 percent from its November 2005 peak. The low-priced tier continues to take the brunt of it, down 3.4 percent for the month and 33.8 percent from its June 2006 peak.

The continued underperformance of the low tier is primarily due to the explosion in subprime credit availability, which first helped low-end prices rise in great excess to prices in the higher tiers and then led to a preponderance of foreclosures among those same formerly high-flying properties.

The Case-Shiller index indicates that as of March, San Diego single family home prices in aggregate had declined 25.9 percent from their collective November 2005 peak.

-- RICH TOSCANO