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The Case-Shiller index of San Diego home prices declined across the board in December:

The index was down 1.3 percent for the high-priced tier, .3 percent for the mid-priced tier, .5 percent for the low-priced tier, and .7 percent overall.  Both the high and middle tiers have now made a full round trip back to the levels they saw at the early-2009 trough, but the low-priced tier (which, as we will see below, suffered the biggest decline during the crash) remains 9.6 percent above its 2009 low.  All homes in aggregate are still up 4.1 percent from the low.

Year-over-year, the high tier was down 5.0 percent, the middle tier 4.8 percent, the low tier 6.0 percent.  The overall index was down 5.4 percent from a year prior.

Here’s a look at the seasonally-adjusted numbers:

December is typically a weak month for prices, so adjusting for that fact renders the price declines for that month a bit more mild.  Seasonally-adjusted prices were down .4 percent each for the low and high tiers, up .3 percent for the middle tier, and down a scant .1 percent overall.

Here are the assorted price changes from the peak.  Prices by this measure are down just about 40 percent since the height of the bubble:

Here is the same graph as above, but adjusted for inflation.  This is an important consideration for longer-term price graphs, because it takes into account the fact that while a dollar today may be called the same thing as a dollar was in the past, it is actually less valuable and buys less stuff.  If a house was worth $300,000 in 2009 and it’s worth $300,000 now, the house is actually less valuable now than it was back then, because $300,000 represents less purchasing power now than it did in 2009.  (This may seem obvious to many of you, but I’m always surprised at how many people focus exclusively on nominal prices without taking inflation into account, so I thought I’d mention it).

In any case, “real” (inflation-adjusted) home prices were at another new post-bubble low, down about 48 percent from the peak.

Finally, here is a long-term view of the Case-Shiller indexes, also adjusted for inflation.  The inflation-adjusted Case-Shiller index was lower in December than it has been at any point since October 2000.

Rich Toscano is a financial advisor with Pacific Capital Associates*.  He can be contacted at rtoscano@pcasd.com.

Rich Toscano

Rich Toscano has been observing the housing market for Voice of San Diego, with the occasional prolonged absence, since 2006. Follow him on Twitter at...

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