San Diego Housing Market News and Analysis
March Data Rodeo -- Housing Market Smoking Hot
Submitted by Rich Toscano on April 21, 2013 - 7:06pm
Sorry if the title sounds hyperbolic, but... wow, it's true. As of March, the market was blazing (to continue with the heat-related metaphors).
Let's start with this graph of the median price per square foot since the 2009 trough:
OK, you can probably ignore the huge spike in the condo psf, as the condo series tends to be all over the map. But how about that (much more reliable) detached home psf -- up 4% for the month, and 18% year-over-year.
Here's how it looks from the peak:
Here's the "predicted" Case-Shiller price index, based on three months of single family psf's:
The culprit for this recent and accelerating price surge is the unbelievably low level of inventory...
...against the strongest March demand in years:
...which combines to plunge the all important "months of inventory" figure into the abyss:
I refer to the month of inventory ratio as "all important" because it measures how much supply there is compared to demand, and has historically been correlated very well with short-term price pressure as seen in the following graph:
Months of inventory just reached a low (for the period of time for which I have data), and the monthly change in single family home prices was the second highest ever. Not a coincidence. The ratio isn't a perfect indicator (there isn't such a thing), but it makes sense that it should work this way, and historically, it has. The new low in months of inventory implies more upward price pressure ahead.
I'd be interested in people's thoughts: why do you think is inventory so low, and what might cause that to change?
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|* Rich Toscano is a registered representative of and offers securities and investment advisory services through Girard Securities, Inc., a registered Broker/Dealer, Registered Investment Advisor, and member FINRA/SIPC. Pacific Capital Associates is not a subsidiary or affiliate of Girard Securities. The views and opinions expressed on this site are not those of Pacific Capital Associates or Girard Securities, Inc. The information on this site should not be construed as investment advice.|