San Diego Housing Market News and Analysis

Over at voiceofsandiego.org I put up an article about the October employment figures with the typical chart plus a comparison with the 1990s recession. For the chart-happy, additional charts can be found below.

This one is the same as the chart at Voice except in percent terms instead of job terms.

The site is undergoing a migration to a new server and will be in "read only" mode while the process is underway to ensure no data is lost. The site may at some point go down altogether as I use the opportunity to make some software upgrades. Thanks for your patience.

Update: OK, we're back online... details after the jump for those interested.

Home sales have increased dramatically in recent months, but that brisk activity is far from uniform. While cheap homes are positively flying off the shelves, sales have actually slowed in many of the more expensive markets.

continue reading at voiceofsandieog.org

October saw an epic drop in the median price per square foot paid for condos, down 14.8% in a single month:

Credit default swaps have been a major element in the ongoing financial crisis. That doesn't mean it's necessarily easy to understand just what the problem is with them. I've taken a crack at it in the past, but more recently I heard an analogy that makes the entire situation a lot easier to visualize.

I heard the analogy during a radio interview with Doug Noland, a mutual fund manager who's been writing dire weekly analyses of the credit market for years. It went something like the following.

Imagine a city near a river that is prone to the occasional flood. At some point, an enterprising citizen gets into the business of writing flood insurance, collecting premiums from insurees in exchange for a promise to pay back the insurees should a flood do any damage to their properties.

Now, imagine that there is an unusually long drought and the river goes a long time without experiencing a flood. Other enterprising types begin to notice that the flood insurer has for years been collecting all this money for doing absolutely nothing. A flood hasn't taken place for ages -- maybe climate patterns have changed so that the river doesn't flood any more. And even if it does flood at some point, they will probably be retired by then. They want in to the easy money flood insurance game too.

continue reading at voiceofsandiego.org

Here, without much in the way of exposition, are some charts of the San Diego Case-Shiller data for August. The first three charts display nominal prices; the latter three display prices adjusted for inflation as measured by the CPI.

Here's a graph I haven't updated for a while. It shows how many jobs were gained or lost, according to the latest monthly employment estimates, by varying San Diego employment sectors in the year leading up to September 2008. (Sectors that changed by fewer than 300 jobs have been excluded to keep the graph a little more readable).

Here's how this chart looked a little over a year ago. Back then, the leisure and hospitality sector was providing a huge boost. That sector is still growing, but not nearly so fast. Meanwhile the housing bubble beneficiary sectors (construction, finance, and retail) have deteriorated significantly. One bright spot: the manufacturing sector, while still shrinking slightly, is doing so at a notably slower pace than it was last year.

(written for VoiceofSanDiego.org)

San Diego County employment declined in September, according to the monthly estimates provided by the state's Employment Development Department.

continue reading at voiceofsandiego.org

Based on the latest month's closed home sales, my simplistic but thus far pretty effective Case-Shiller HPI model forecasts a September decline of 3.0% for the HPI:

The number of homes entering the foreclosure process declined steeply in September -- but the drop is likely temporary.

The blue line on the accompanying graph represents how many Notices of Default, which are the nastygrams sent to delinquent borrowers, were delivered in September. The orange line tracks Notices of Trustee Sale, which inform said delinquent borrowers that their homes are about to be repossessed.

The graph makes it pretty clear that NODs dropped like a rock last month. We haven't seen a number of default notices this low since February 2007 -- a breezier time, when it would have seemed laughable to suggest that mainstream media outlets would be publishing stock photos of Depression-era breadlines a year and a half down the road.

continue reading at voiceofsandiego.org

In response to the prior column on the latest bailout, some people asked for more specific thoughts on the Paulson Plan and what would have happened if it hadn’t been passed.

In truth, I don’t actually know what would have happened had the plan not gone through. Most of the people offering predictions on the topic don’t know either; I’m just admitting it.

I do know this. Our economy has become far too dependent on finance and debt-fueled consumption. We need to return to our economic roots of production and saving. This shift will be painful, and one could make a case for some sort of government intervention to ease the transition.

But the Paulson Plan, the central focus of which is to prop up the prices of financial assets that no private buyer wants to touch, is not intended to ease the transition. It is intended to prevent it.

The plan is thus a giant step in the wrong direction. But this is exactly what you’d expect given that it was developed by the same group of people, using the same flawed analytical framework, that has misdiagnosed the problems all along.

(written for VoiceofSanDiego.org)

Every pundit on Earth is playing the game of picking the various bailouts apart and proposing their own improved bailout schemes. But I think that most of the conversations going on out there miss a critical point: that this bailout and the ones that will in all likelihood follow it fail to address the root cause of the problems.

That root cause, in my opinion, is that the vast majority of political leaders, regulators, and pundits zealously cling to a deeply flawed analytical framework.

To put it more simply: the people and principles that blithely led us into this mess are absolutely the wrong people and principles to lead us out of it.

continue reading at voiceofsandiego.org

Watching Paulson and Bernanke flail around has been a bit time consuming this month. While it's still September, let's get to the rodeo.

I'll start with the Case-Shiller HPI model based on the size-adjusted median:

This month's employment estimates show a deterioration in the retail sector but a slight improvement in the construction sector. Other than that the region's job growth, or lack thereof, has been on a path similar to recent months. So I will simply note that overall employment fell by 5,700 jobs or .4 percent from last year and then move on to the graphs.

The first graph is the usual one displaying the number of jobs gained or lost by the housing beneficiary sectors (construction, finance/real estate, and retail), the rest of the economy, and all sectors combined on a year-over-year basis. Each month's data point represents the year-over-year change for that month (I use this technique to smooth out seasonal effects).

continue reading at voiceofsandiego.org

Well, I called my assorted leaders to register my abject displeasure with the bailout. To keep things short I just noted two opinions:

1. It's ridiculous that we are using taxpayer money to pay above market prices for possibly worthless assets and that the proceeds are going to highly paid people who knowingly took huge risks.
2. I hope there is going to be some sort of accountability among all the regulators who first denied the risks and are now throwing our money at fixing their aftermath. If all the same people stay in charge, this kind of stuff will just keep happening.

I don't know how much good it does to make these calls but since a lot of people are apparently up in arms about the bailout it's worth a shot.

Here are the numbers I called:

White House: (202) 456-1111
Senator Feinstein: (202) 224-3841
Senator Boxer: (202) 224-3553
Congresswoman Davis (I'm in 92103): (202) 225-2040