~Welcome to the Econo-Almanac~

I started this website in mid-2004 to chronicle San Diego’s spectacular housing bubble.  The purpose of the site remains, as ever, to provide objective and evidence-based analysis of the San Diego housing market. A quick guide to the site follows:

  • New visitors are advised to begin with the Bubble Primer or (if wondering about the site name) the FAQ list.
  • Housing articles I’ve written are found in the main section below.
  • Discussion topics posted by site users are found in the “Active Forum Topics” box to the lower right.
  • This website is an avocation; by day I help people with their investments as a financial advisor*.  Market commentary and more can be found on my firm's website.

Thanks for stopping by…

Median Problems

Submitted by Rich Toscano on September 13, 2006 - 8:44pm

Now that this month's housing data has arrived, I thought it would be a good time to briefly review the trouble with the "median price" as a measure of real estate pricing power.

Many observers, noting that the median home sale price was 2.2 percent lower in August 2006 than in August 2005, would assume that the typical home is now worth 2.2 percent less than it was a year ago. But this assumption is not necessarily correct. Because while the median price is a decent measure of how much the typical buyer paid, it does not tell us what that typical buyer got for the money.

When it comes to measuring actual changes in home market values, the median price can be thrown off by the following:

read more at voiceofsandiego.org

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Mystery Solved... Kind Of

Submitted by Rich Toscano on September 7, 2006 - 7:22pm

The plot thickens. Or maybe it... thinnens. I don't know. The point is that the folks at the San Diego Chamber of Commerce have gotten to the bottom of our recent mystery about why their population data differed so much from that of the Census Bureau. Yet their answer has only raised another question.

The Chamber's Rachel Laing elaborates:

The mystery of the difference in the migration data on the Chamber's Web site and the U.S. Census bureau appears to have been solved. Kelly Cunningham, who headed the ERB for years before leaving in early 2005, helped us sort all of this out.

To sum it up, the Chamber uses California Department of Finance data, because the state agency is assumed to have better ability to track and estimate the state's population changes. They also release their estimates in a more timely fashion -- months ahead of the Census Bureau. SANDAG also uses DoF data over the Census Bureau data in its planning.

read more at voiceofsandiego.org

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More Job Dissection

Submitted by Rich Toscano on September 6, 2006 - 9:27am

As a follow-up to the prior post ("Job Dissection"), I wanted to zoom in on the past year and have a look at how the various industries have fared more recently. The results are found in the accompanying chart.

Construction is up 3 percent from last year. This makes sense--as housing demand erodes, developers are scrambling to finish their construction projects sooner rather than later.

read more at voiceofsandiego.org

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Inventory Growth Takes a Breather in August

Submitted by Rich Toscano on September 5, 2006 - 7:43pm

Inventory growth appears to have flattened.

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Dissecting the Job Market

Submitted by Rich Toscano on September 4, 2006 - 11:44am

A longstanding premise of mine has gone as follows: to argue that housing will continue to flourish because of San Diego's strong economy is circular reasoning, because in reality the economy owes much of its purported strength to the housing boom.

I thought it would be fun (that's right, fun) to chart out some of the characteristics of San Diego's job market during the big housing boom. I have designated as my starting point the year 2000, chosen primarily and somewhat arbitrarily as a "neutral" year for residential real estate. The depths of the mid-90s housing bust were well behind us, housing mania was still a couple of years away, and home valuations were in the middle of their historic range. San Diego's housing market was, in other words, neither too hot nor too cold. It was just right.

read more at voiceofsandiego.org

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August Credit Market Update

Submitted by Rich Toscano on September 1, 2006 - 10:34am

30-year fixed rates have dropped like a rock since late July:

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60 Days to Tighter Lending?

Submitted by Rich Toscano on August 29, 2006 - 12:41pm

Fellow blogger Calculated Risk, who has tenaciously followed the developments of the federal regulation on non-traditional mortgages, tells us that the guidelines will be put in place within 60 days.

For those who are unfamiliar, I wrote a piece on the new lending guidelines back in December when a draft version was released.

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Migration Mystery

Submitted by Rich Toscano on August 25, 2006 - 3:45pm

As I recently tooled around the San Diego Chamber of Commerce website, I came across a document called the "San Diego Economic Bulletin: Forecast 2005 & 2006." This document is a gold mine of the kind of local data that causes a nerd like me to mewl with delight.

But my delighted mewling turned to confused mewling as I read the section on population growth.

The first accompanying chart indicates the U.S. Census Bureau's take on who's coming and going in San Diego. (Readers who are particularly interested or lonely can find the gigantic Census Bureau spreadsheet here.)

read more at voiceofsandiego.org

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Liar Loans

Submitted by Rich Toscano on August 24, 2006 - 5:25pm

Over the two-plus years I've been publicly rambling about the San Diego housing market, I've spilled very little ink on the topic of stated income mortgages--the so-called "liar loans" that require no proof of borrower income.

It's not that I find this particular spawn of the housing bubble uninteresting. Far from it. But the fact is that I try to concentrate my efforts in the realm of the measurable and verifiable, whereas most information about stated income loan abuse is of the more anecdotal variety. There ever plenty of anecdotes, to be sure--I think we've probably all heard a version of the story wherein the landscaper or Starbucks barista is mysteriously pulling down six figures. But there has really been no way to measure how serious the problem really is.

It seems now that some more reliable information is beginning to surface.

read more at voiceofsandiego.org

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Affordability Wars

Submitted by Rich Toscano on August 22, 2006 - 10:54pm

The California Association of Realtors (CAR) recently announced a new index to measure home price affordability for first time buyers. The distinguishing feature of this new affordability index appears to lie in its looser definition of what exactly is affordable: whereas the prior index assumed a 20 percent down payment and a maximum of 30 percent of household income spent on housing costs, this new index allows for a 10 percent down payment and up to 40 percent of income devoted to house payments.

This is entirely ridiculous. Buyers now shell out a record portion of their earnings for home payments, as well as taking on previously unthinkable levels of debt in order to purchase their homes. The fact that people are so commonly forced to stretch their fiscal limits does not, as CAR would seem to imply, indicate that it is now more affordable to do so. It means precisely the opposite.

read more at voiceofsandiego.org

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The March of Progress, Revisited

Submitted by Rich Toscano on August 22, 2006 - 6:59pm

I heard some folks were having trouble with the rich text editing capabilities so I wanted to expound on that a bit. (To non-nerds, “rich text” enables the use of italics, bolding, clickable links, and the like).

Techies among you can manually enter the typical markup codes if you’d like, but for the rest, you are able to utilize a rich text editor. To enable this editor, click the "enable rich-text" link when you are writing a comment, as pictured here:

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A Face for Radio

Submitted by Rich Toscano on August 18, 2006 - 11:11am

It's a media frenzy! For me, anyway, as I'm now making two media appearances this weekend—but that's well up from my typical rate of 0 media appearances per weekend.

Actually, "appearance" isn't the most fitting term. I've been invited to chat with Mark Miller on his radio show, "Talk to the Lawyer." The show will air this Saturday, August 19, at 2PM, on KCBQ 1170AM. You can also listen online at www.kcbq.com.

Also joining will be Ben Jones of The Housing Bubble Blog fame. The show will be broadcast live, so feel free to call and harass us at 888-344-1170.

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Much Ado About Renting

Submitted by Rich Toscano on August 17, 2006 - 8:25pm

I was just re-reading Catherine MacRae Hockmuth's excellent piece on her personal decision to become a renter. And I was pretty blown away by the volume (lots) and tenor (highly emotional) of user comments.

Catherine has already addressed some of the comments in a followup article. My purpose today is not to address any specific point, but rather to take note of the fact that her article created such a firestorm.

Let's try a little thought experiment. Imagine if Catherine had written that article in the year 2000. Would anyone have gotten lathered up enough to accuse the author (and, in one case, the entire Voice staff) of immaturity and ignorance? Would they have scornfully written off the author as a new and well-deserving member of the permanent renter underclass?

read more at voiceofsandiego.org

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Take 5, Take 2.5

Submitted by Rich Toscano on August 17, 2006 - 10:06am

A thousand apologies to those who tuned in to KSWB last Sunday. There was a mixup on the date: I will be appearing on Take 5 this Sunday, August 20. That's Sunday, August 20, 10:30PM on KSWB (channel 5).

This time I mean it.

To those who have requested such, I will try to get an online video of the appearance. However, I can't promise anything. I'm just a simple software guy, and your video streams confuse and frighten me.

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The Wealth Effect Illustrated

Submitted by Rich Toscano on August 16, 2006 - 3:18pm

When home prices rise, homeowners tend to spend more money. In some cases their newfound real estate wealth emboldens them to save less and spend more, while in other cases they actually borrow against increased home values to increase their spending money. In either scenario, the net effect is that people buy more stuff.

This so-called "wealth effect" is a widely acknowledged side effect of asset market booms.

read more at voiceofsandiego.org

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