~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…

Is Inflation Dead?

Submitted by Rich Toscano on September 26, 2006 - 10:14am

Sorry about the radio silence this past week... I've been real busy getting the new portfolio management/financial advisory gig* off the ground**. What writing I did get a chance to do over at the voiceofsandiego.org concerned the Amaranth blowup, not housing, so I didn't link to it from here.

Now I am compelled to come out of hiding because of bond yields.

I made note a while back when the yield on the 10-year Treasury Note finally crossed the elusive 5% mark. The 10-year yield eventually rose to 5.24%, but as the below chart (courtesy of StockCharts.com) shows, it went into freefall soon thereafter.

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Expanding Homeownership?

Submitted by Rich Toscano on September 20, 2006 - 11:25am

Yesterday, Scott Lewis wrote a great piece on the logical inconsistencies of some of the the city's affordable housing efforts.

One such policy, while having escaped Scott's truculent attentions, nonetheless deserves to be highlighted as especially irrational. It is described in a recent Daily Transcript piece called "Sanders seeks action on affordable housing" (subscription required):

...the [San Diego Housing Commission] is continuing its efforts to expand homeownership through the creation of two new, first-time homebuyer programs...

Giving people money to buy houses artificially stimulates housing demand (sorry, "expands homeownership"), the effect of which is to render housing less, not more, affordable. It's effectively a government subsidy for the housing bubble and entirely the wrong way to approach the problem.

read more at voiceofsandiego.org

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A New Home for the Econo-Almanac

Submitted by Rich Toscano on September 19, 2006 - 10:43am

The site was getting a little big for its britches, usage-wise, so this past weekend I moved it to a more powerful server. I believe I (eventually) got everything working on the new machine, but if you encounter any problems, please let me know.

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August Home Sale Data

Submitted by Rich Toscano on September 15, 2006 - 11:39am

As we've all heard by now, year-over-year median price comparisons continue to decline. Here's a picture of resale median prices:

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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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