Housing market

Analysis of the (primarily) San Diego housing market.

In Like a Lamb -- Some January Stats

Submitted by Rich Toscano on February 13, 2006 - 8:28pm

The Union-Tribune has some January San Diego housing statistics up. In short, prices were down from December, but still slightly positive year-over-year. Resale homes and condos did fine, while new homes once again absorbed the brunt of the price damage--the median new home price was hammered for a $104,000 loss on the month!

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Cluster Selling

Submitted by Rich Toscano on February 10, 2006 - 10:21am

Will Carless at the Voice has written an intriguing piece on cluster selling. This term describes a dynamic that is apparently taking place in San Diego wherein homeowners put their homes up for sale as they see their neighbors doing the same, resulting in concentrations of for-sale inventory in neighborhoods where this is happening. Several real estate agents "in the field" have apparently corroborated that cluster selling is taking place for the first time since housing bottomed out in the 90s.

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Price Changes by Zip Code

Submitted by Rich Toscano on February 6, 2006 - 10:58pm

I thought it might be interesting for people to see how the individual zip codes stacked up on a year-over-year basis. The below tables list each San Diego zip code's condo and SFR medians for Q4 2005 vs. Q4 2004. I'm tagging it as Premium Content because the creation of these tables required the DataQuick data, for which I pay through the nose, in addition to a substantial amount of time spent writing code to mine the data. (Forgive the excuses, but someone was recently bagging on me on another website because I charge a fee for access to certain content—so I felt compelled to explain why I do this).

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Worst Shortage Ever: Downtown Edition

Submitted by Rich Toscano on February 3, 2006 - 12:24pm

Will Carless at the Voice of San Diego released a column yesterday, hot on the heels of my own, about the building climate in downtown. Central to the story is a builder who has gotten land, designs, permitting, and everything else ready to start building—but is instead just trying to sell the project and bail out. Of course, this is just one project and one builder, but it may be indicative of things to come. One real estate agent is quoted as saying that the boom attracted a lot of inexperienced people to the downtown building game: "In the heyday, a monkey could be a developer in downtown."

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Housing Market Report: January 2006

Submitted by Rich Toscano on January 31, 2006 - 11:56pm

Below I will crunch the local housing price, sales volume, and inventory numbers to get an in-depth look at where the San Diego market stands and where it's likely to go in the months ahead.

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Downtown San Diego's Condo Onslaught

Submitted by Rich Toscano on January 27, 2006 - 10:15am

The Voice has another housing-related piece today, this one on the burgeoning condo oversupply in downtown San Diego.

As Premium users learned a couple months back, downtown (otherwise known as Craneville, CA) has an 18 month inventory of condos listed for resale on the MLS. This means that at the rate at which sales took place in 2005, it would take 18 months for all the resale condos to be sold. This doesn't even include new non-MLS listed condos that may be for sale, nor does it include condos under construction that may come online for sale during the next 18 months.

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Worst Shortage Ever

Submitted by Rich Toscano on January 24, 2006 - 10:31pm

Regarding my post on the Myth of the Housing Shortage, one commenter suggested that I look at jobs vs. housing supply instead of of population vs. housing supply. I have done so below, with surprising results:

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The Rise of the Desperate Seller

Submitted by Rich Toscano on January 23, 2006 - 11:11am

Today's Voice of San Diego hits on a key driver of home price movements: what they refer to as "desperate sellers"—people who, for one reason or another, need to sell their homes.

To understand their importance, let us first imagine a world without desperate sellers. In such a world, a home price decline of any significance would be highly unlikely. If housing demand declined such that homes weren't fetching the desired prices, most homeowners would just take their homes off the market and stay put. They would, in the words of my friend Gary London, "lock their doors instead of locking in losses." The resulting decrease in the supply of homes for sale would balance out the decline in demand and stabilize prices.

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A Warning Light on OC's Dashboard

Submitted by Rich Toscano on January 20, 2006 - 10:31am

The OC Register has an interesting piece on a surge in delinquent property taxes that has the Orange County treasurer a little worried. The treasurer, who seems like a pretty sharp guy, wonders, "[A]re we observing the beginning of a trend or is this a blip?"

People who rely on "traditional" measures of economic health, such as wage growth or unemployment, are missing a big piece of what makes the SoCal economy go: home equity extraction. Lacking a good city-specific way to measure home equity extraction, one of the best ways to get a handle on the health of a given area's homeowners is by observing rates of change of property tax and mortgage defaults. We are only now beginning to see increases, but I believe that with the amount of adjustable-rate debt out there, we will start to see a lot more homeowner fiscal trouble in 2006 and beyond.

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We Are the Champions

Submitted by Rich Toscano on January 18, 2006 - 10:28am

The latest PMI Risk Index is out. I think these reports are hopelessly optimistic—for instance, after an unbroken winning streak in which prices more than tripled despite the lack of any demographic reason to have done so, San Diego is designated as having only a 59% chance of seeing even a tiny price decline. The reports do have some utility, however, in that we can at least get a sense of what the mortgage insurers think are the relative risks between different areas. We Southern Californians should be unsurprised to see that, as with China's Olympic swimmers, our artificially pumped-up home team has dominated the winner's list. For your convenience I have assembled a table below that shows both the PMI Risk Index results for local areas along with a column indicating each area's level of housing valuation relative to historical average (see these valuation charts for more background).

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The U-T's 2005 San Diego Housing Wrap-Up

Submitted by Rich Toscano on January 17, 2006 - 10:24am
The Union-Tribune is running a great article on the state of the San Diego housing market. The article includes two sidebars that I found extremely interesting: a graphic showing appreciation by area, and a PDF file rounding up home prices for the entire county. Fellow data-nerds should find hours of amusement combing through these two files.
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Visions of the Future

Submitted by Rich Toscano on January 16, 2006 - 12:22am

This Voice of San Diego housing prediction roundup, along with a commenter's question on the topic, has motivated me to write about forecasting, vis-à-vis whether it is is a complete waste of time. And the answer is: yes. Or no. Or, it depends, I guess.

Alright, let me start from the start, using a familiar graph as a jumping point:

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When Bubbles Burst

Submitted by Rich Toscano on January 8, 2006 - 7:02pm
Housing bubbles typically take years to deflate completely. In today's LA Times, however, an article on the burst of the Shanghai housing bubble demonstrates that even real estate is not immune to dramatic turns to the downside. After a period of rampant speculation and overbuilding that drove Shanghai home prices to double in three years (not terribly far, I would note, from the 5 years it took Southern California real estate to do the same), the market has rapidly taken a turn for the worse, with some condo prices having dropped 50% since March. That's not a mistake—prices have dropped 50%. Don't the Chinese realize that real estate only goes up? Perhaps we should send someone from NAR over to let them know.
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Housing Slowdown Starting to Cause Real Pain

Submitted by Rich Toscano on January 7, 2006 - 12:45pm

A good friend of mine named Ramsey enjoyed a multi-decade career in the San Diego real estate industry before more recently becoming a full-time stock trader. Between his knowledge of the local housing scene and of economics and financial markets he is able to routinely come up with some very interesting analysis. He usually shares his insights with me over beef tendons, pig ears, jellyfish, and other frightening "delicacies" during our weekly meetings at local Chinese restaurants with questionable ratings from the Department of Health.

Today, however, he spared me the entrail-eating experience and sent me an interesting email in which he posits that the local real estate industry is already experiencing "layoffs" of a sort due to the housing slowdown. Ramsey's email is reprinted below in its entirety:

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Piggington Goes North

Submitted by Rich Toscano on January 3, 2006 - 8:43pm

Southern California is our beat here at the Econo-Almanac. But when an enterprising reader sent me a table full of data on the San Francisco Bay Area, I couldn't help but throw it into a graph. I figured that with the effects of the dot-com boom and subsequent bust, the Bay Area would be an altogether different animal than SoCal. But that wasn't really the case at all. While Bay Area home prices took off sooner and have proved a little more volatile, the end result is very similar: home sale prices rose much faster than rents.

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