~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…

Surprises in Store for ARM Holders

Submitted by Rich Toscano on March 21, 2006 - 9:07pm

Check out the graph at the bottom of this Real Estate Journal article on adjustable rate mortgages. It ends up that many borrowers (nationwide, but if anything I imagine that SoCal is worse) aren't even aware of key facts about their ARMs, such as the cap on individual or overall rate increases, how rate resets are calculated, and more. Pretty amazing.

I imagine that many of these folks never bothered to learn the facts about their resets because they figured they'd sell or refi (for huge profit, or course) before the resets ever took place. Given flat home prices and rising rates, however, that no longer seems like such a great plan.

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Bubble Money in OC

Submitted by Rich Toscano on March 20, 2006 - 10:33am

In the OC Register, Jonathan Lansner connects the dots about housing and Orange County's economy. In discussing a burgeoning slowdown in OC (corroborated by slowing profits by businesses and increased skipped payments by consumers), Lansner notes:

In the past year, $100 billion was lent against Orange County property - a sum equal to the gross domestic product of nations such as Iraq or New Zealand.

Local lending's totality is up 2 percent in a year. That ample flow of money, if nothing else, may be allowing troubled property owners in this town to put off harsh decisions.

Yes, exactly. The press is slowly but surely coming around to the idea that the housing bubble's enormous (but temporary!) stimulative effect on the economy is an issue of great import.

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Mortgage Reset Mania

Submitted by Rich Toscano on March 15, 2006 - 7:03pm

This week is kind of a mess, so I'm going to have to make do with a "drive-by posting," in which I simply point to someone else's content.

Today's someone-else is Barry Ritholtz of The Big Picture, a financial blog of which I am quite fond. And the content is his recent post on the impending wave of mortgage resets in 2006 and 2007: $2 trillion dollars worth of mortgages, to be exact, or about 1/4 of all mortgages.

Many borrowers in this category still have plenty of equity.
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Good Luck With That

Submitted by Rich Toscano on March 13, 2006 - 11:07pm

The LA Times is running an article on the wave of condo/hotels, which appear to be bubble's latest foray into absurdity. Why buy an overpriced condo, when you could buy an overpriced condo that you only get to live in for one month per year?

As an aside, lest you start to think that San Diego is overcome by doom and gloom, I give you a potential buyer at the Hard Rock Hotel:

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Drink the Poole-Aid

Submitted by Rich Toscano on March 11, 2006 - 7:26pm

A speech on housing by the Fed's William Poole made the rounds this week. I thought I'd link to it because it clearly illustrates a point that I think is crucial to always keep in mind: that the folks at the Federal Reserve are politicians first and economists second.

Let's jump right in with this line from his speech:

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Condo Hell Freezes Over

Submitted by Rich Toscano on March 8, 2006 - 10:14am

Folks in the UTC area (fondly called "Condo Hell" by inhabitants--I know because I used to be one) may be interested in today's Voice of San Diego piece on the University City housing market. This area has apparently sat out the latter part of the boom, with prices pretty stagnant since late 2003. The zip code winners/losers list I recently put together shows the UTC area as having a 3% median price increase over the past year... positive, at least, but not enough to cover the cost of selling.

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Housing Market Report: February 2006

Submitted by Rich Toscano on March 3, 2006 - 9:36pm

This article will examine trends in San Diego home price levels, breadth, sales volume, and inventory in order to determine where the undercurrents are taking the market. Additionally we will take a look at a warning light that has started to flash for the local economy.

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When Mortgage Brokers Attack

Submitted by Rich Toscano on March 1, 2006 - 5:30pm

A reader forwarded me a hilarious Craigslist posting. This is from, of all places, the "casual encounters" section:

If you are interested in having some fun with a cute (5'4" 110 lbs, size 3), and openminded girl...

Hmmm... sounds pretty good so far. But read on...

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Disappearing Demand

Submitted by Rich Toscano on February 28, 2006 - 11:50pm

Will Carless at the Voice of San Diego writes about January's steep home sale decline. While the January year-over-year decline was particularly dramatic, the trend towards shrinking sale volume has been firmly entrenched for months. And, complete lack of concern on the part of the interviewees notwithstanding, long-term trends in declining San Diego sales volume have usually lead to declining home prices in the past.

I will examine the latest housing market data in great detail in the next Monthly Housing Report, which I hope to release tomorrow.

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Big Housing Players Turning Bearish

Submitted by Rich Toscano on February 27, 2006 - 10:13am

Thanks to a reader who pointed me at a Business Week article called Jitters on the Homefront (warning: this is BW subscriber access only). The article interviews famed housing bear Robert Shiller along with Countrywide CEO Angelo Mozilo and KB Homes CEO Bruce Karatz. Shiller's thoughts are no surprise, but I was pretty shocked by the bearishness of the two CEOs, especially Mozilo. Here is a brief excerpt; emphasis is mine:

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A New Low for the Bullish Propaganda Mill

Submitted by Rich Toscano on February 24, 2006 - 7:20pm

A reader sent the following article in last weekend. This has been mocked elsewhere, but I couldn't resist taking my own shots, as this is without doubt the most inept attempt at real estate cheerleading that I've seen to date:

CONTRARY TO POPULAR BELIEF…IT PAYS TO BE A CONTRARIAN.

Sir John Templeton was known as the “Dean of Investing”, and he was a classic contrarian. Mr. Templeton said to buy when things looked most pessimistic and sell when the masses felt most optimistic – and his attitude paid off. He began his Wall Street career in 1937, created many of the world’s largest and most successful international investment funds, and is now a full time philanthropist at age 92.

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Credit Market Report: February 2006

Submitted by Rich Toscano on February 20, 2006 - 9:29am

Rates are on the rise again, Bernanke has given us some hints as to what's in store for his first few months, and two US Senators threaten to inadvertently burst the housing bubble in March. The various goings-on in the credit markets, and their likely effect on San Diego housing, are discussed below.

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It's Dark Matter Week!

Submitted by Rich Toscano on February 15, 2006 - 10:25pm

We continue with Dark Matter Week, in which I outsource all content writing and then pat myself on the back for having so much intellectual capital (or something like that).

Today's outsourced content comes from an Econo-Almanac reader who is an appraiser here in San Diego. He recently sent me a note indicating how he thought things would play out for San Diego. I thought he made several interesting points so I got his permission to share it:

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A Bad Month for Everyone

Submitted by Rich Toscano on February 15, 2006 - 10:22pm
San Diego wasn't the only Southern California region to see a home price drop in January. The median Orange County home price dropped by 6% between December and January, although the year-over-year appreciation is notably stronger than San Diego's at 9%. SoCal as a whole was down 2.1% since December. Of course, it's never a good idea to make too much of one month, especially when that month is January, but we will obviously be watching for emerging trends in the months to come.
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Dark Matters

Submitted by Rich Toscano on February 14, 2006 - 10:58am

This post may only appeal to those among you who are really into the global finance aspect of things, but here goes. A couple sites I read have recently discussed the "Dark Matter" theory that's become all the rage. The very short version of this theory is that since the US makes a net profit on its foreign investments, it must actually be a net creditor, instead of a net debtor as everyone thinks. The dark matter in question consists of those apparently unmeasurable assets that turn our national balance sheet positive.

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