San Diego Housing Bubble News and Analysis

Kelly and Will over at voiceofsandiego.org broke the story yesterday on a huge condo scam involving overpaying for condos with loans made to straw buyers.

What's interesting is that this all happened in the midst of the bust in mid-2008, after lending had tightened up. The scammers even paid 20% down -- but the prices were inflated by so much (sometimes more than 100%) that the 20% down was easily recouped.

What's also interesting is that the straw buyers willingly lent their identities to this guy:

This is just an investigation by some journalists -- no law enforcement agencies were involved (yet, anyway). I wonder how much of this kind of stuff has been going on out there?

You can read the whole piece here.

I will have the complete March rodeo up this week; in the meantime, I have written up (and graphed) the March size-adjusted median price figures at voiceofsandiego.org.

In reaction to the latest Case-Shiller home price graphs, a few readers have asked how a property worth not much more than $400,000 can be considered a member of the "high-priced tier."

The answer is that there is no considering about it. Each month, the Case-Shiller price tiers are calculated by separating all sold homes into thirds by price. The high-priced tier represents not someone's subjective idea of what comprises a high-priced San Diego home, but rather the most expensive one-third of homes sold during the measurement period.

For January's Case-Shiller index, the cutoff between the top one-third and the middle one-third was $419,143. The cutoff between the middle one-third and lowest-priced one-third of homes sold was about $284,375.

The tier cutoffs, and especially the one between the high- and mid-priced tiers, used to be a lot higher.

continue reading at voiceofsandiego.org

Kelly Bennett has written several words about today's release of the Case-Shiller index for January, so I'll largely just supplement with a few charts.

Here is a look at the decline from the peak for all three price tiers:

Note that the high-priced tier once again fell hardest last month. Relative weakness in this tier is a fairly new development, as the graph makes clear.

continue reading at voiceofsandiego.org

February proved to be another brutal month for San Diego's job market, according to the EDD's latest estimates. The region is estimated to have lost 37,900 jobs between February 2008 and February 2009. This is a contraction of 2.9 percent.

Early in the downturn, the losses first showed up in the sectors with the most exposure to the housing bubble: construction, finance, and retail. By now, however, job losses are quite a bit more widespread. This is evident in the following graph, which shows the year-over-year change in employment for the three most bubble-exposed sectors, the remainder of the economy, and all sectors in total:

continue reading at voiceofsandiego.org

A record number of San Diego mortgages went into default last month. 3,705 homes entered this initial stage of foreclosure, surpassing the previous high of 3,601 default notices delivered in April 2008.

Trustee sale notices, which occur later in the foreclosure process, remained well below their records, but since they lag default notices it is reasonable to expect that they will rise soon as well.

The following graph shows that the default respite enabled by a late-2008 change to state law was short-lived:

continue reading at voiceofsandiego.org

Today the California Employment Development Department revealed, unsurpringly, that San Diego's job losses have been severe. The latest update included a revision to last year's data, which painted a bleaker picture of recent months than had previous releases. (This is also unsurprising, given some of the statistical jiggering that takes place with the job numbers).

The graph below shows the year-over-year rate of change for the three hard-hit sectors related to housing, as well as the rest of the economy and all sectors combined. Remember, this is a rate of change graph. So if a line turns up but is still below zero, as in the case of finance, that means that the sector in question is still shrinking, but just not as quickly as before. And if a line is below zero but flat, as in construction, that means that the sector is still losing jobs, but is doing so at a steady rate.

continue reading at voiceofsandiego.org

Well, people continue to ask questions about those home price rate-of-change graphs so I thought I'd put up a few more.

Some people wanted to see a longer-term view that showed the year-over-year price change during the boom as well as during the bust. And some wanted to see the actual price index alongside the rate of change. The below graphs offer both. In order to keep things readable I gave each price tier its own graph:

continue reading at voiceofsandiego.org

People seemed to find the rate-of-change graph in the prior post interesting so I thought I'd follow up with a look at how all the individual Case-Shiller price tiers have been trending.

The results are found in the accompanying graph...

continue reading at voiceofsandiego.org

After last week's note on the topic of dramatically disparate buyer interest in different property types I thought I should update the stats on which zip codes have seen the biggest increases in sales activity. To change it up a bit this time, I sorted the list of zip codes based on January 2009 median price instead of sorting zips by growth in sales volume as I had previously. (The median price is a flawed indicator, for reasons often discussed here, but it's the only thing available at the zip code level and besides, it is good enough for gauging the kinds of broad trends we are looking for with this study).

continue reading at voiceofsandiego.org

Housing sales volume has been improving of late, as I noted last week. But now that foreclosure activity has bounced back after a temporary lull that resulted from a change to state law, the number of existing homes going into foreclosure each month is once again higher than the number being sold. That was the case in December, anyway, when DataQuick recorded 3,004 existing house and condo sales compared to the 3,315 mortgage default notices recorded by the county. Default notices dropped to 3,055 in January, but while the January DataQuick numbers aren't out yet, other data indicates that sales will also be lower than they were in December.

Here's an update of a chart we've looked at from time to time as the housing bust has progressed. The orange line on the graph divides the number of single family home sales in a given month by the number of mortgage defaults that same month. The idea is to get a rough idea of how demand stacks up against potential "must-sell" supply. (Condos are excluded from the chart simply because I could only get my hands on historical sales data for single family homes, so the trend changes in this ratio are more important than the absolute number.)

continue reading at voiceofsandiego.org

San Diego resale housing activity logged its strongest January in three years:

And inventory declined somewhat, leading to a months-of-inventory figure that was just about half of what it had been in January 2008...

continue reading at voiceofsandiego.org

3,055 San Diego homes entered the foreclosure process in January. This is down from last spring's record-setting levels, but not by much in the grand scheme of things.

The continued onslaught of mortgage default notices makes it clear that the three-month plunge seen in late-2008 was the result of new foreclosure rules, not of any sort of market improvement.

continue reading at voiceofsandiego.org

Few would have believed, back in the boom days, that a 1.6 percent monthly decline in the median price per square foot for homes sold in San Diego County would be considered a pretty good month. But here we are.

continue reading at voiceofsandiego.org
(data rodeo coming soon)

Humor me for a couple more graphs so that we might expand on last week's post on employment.

First up is a graph showing how the various employment sectors (not just the housing-related ones that I like to single out) fared in the year 2008:

continue reading at voiceofsandiego.org