by Calculated Risk on 8/01/2009 06:30:00 PM

The big question of the week was: "Are house prices near the bottom?"

My feeling has been that house prices are probably close to the bottom in the lower priced bubble areas with heavy foreclosure activity (Lawler's "de-stickification"). Inventories are very low in many of these areas, and activity has been fairly high as first time buyers and investors buy distressed properties.

However it appears there are more foreclosures coming, and the level of inventory will be the key to future price declines.

My view is that mid-to-high priced bubble areas - with far fewer distressed sales than the low-to-mid priced areas, and much higher inventory-to-sales levels, and few move-up buyers - will see continued real price declines, although the pace of price declines will probably slow.

That still seems reasonable, and it depends on location. Here is a look as tiered house price indices from Case-Shiller to see if the lower priced areas have fallen further than the high priced areas.

All graphs use the seasonally adjusted indices and nominal prices (not inflation adjusted).

Click on graph for larger image in new window. The first graph is for Phoenix. The low priced tier has fallen the furthest, but the high tier price range isn't very high - and is impacted by the mix of houses sold. Note the price range of the tiers changes by city.

The second graph is for Miami. Here is appears that all tiers are now at about the same level.

The third graph is for Los Angeles. Once again the low end area has fallen the furthest, however the high tier starts pretty low for Los Angeles because of the mix of homes that are selling. So this might be misleading for the mid-to-high end.

This graph is for Washington, D.C.

This graph is for Boston. The pattern is slightly different - the low end is still above the mid and high tiers.

Next up is San Diego. Although the low end tier has fallen the furthest, the high end tier pricing is pretty low for San Diego because of the mix.

The last graph is for San Francisco and show the the low end has increased more than the mid-to-high tiers, and has also fallen further.

This was an interesting exercise (at least for me!), but I'm not completely comfortable with the tiered pricing because the buckets are impacted by the mix of homes sold.