San Diego Housing Market News and Analysis
~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:
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Submitted by Rich Toscano on May 1, 2006 - 6:07pm
I found an interesting tidbit on the Housing Bubble Blog. A researcher looking at historical California inventory levels found that once the supply of homes hits 9 months worth of sales, median prices fall "on a consistent basis." This is a statewide stat, but it at least gives us some general insight as to the location of that line in the sand past which increased inventory starts to push prices south.
In regard to price declines, what's more important than the overall inventory level is the amount of "distressed" inventory supplied by owners who have to sell at whatever price they can get. But those two numbers tend to trend up and down together.
As I will discuss more in the monthly housing report (which is coming very soon, and will include new data sources to provide a more current read on the market than is supplied by DataQuick) the combined condo and SFR inventory in San Diego is currently a little below 8 months.
Submitted by Rich Toscano on April 24, 2006 - 11:16am
It's been an exciting month in the credit markets—that is, if you are the type of person who considers anything that happens in the credit markets "exciting." Sadly, I am just such a person, so without further ado let's have a look at everything that's happened since last month's report.
Submitted by Rich Toscano on April 19, 2006 - 8:34am
Will Carless at voiceofsandiego.org has written a piece about an apparent exodus of wealthy investors from San Diego real estate. It has an interesting bit of data: 18% of San Diego home purchases last year were made for investment purposes. (This is out-and-out investing, not the stealth speculation I discussed last week).
Elsewhere in the article, various financial advisors tell us that it may be a good time to unload those alligators. "If you have an investment property, this is a wonderful time to get the heck out," counsels one. I completely agree... though I would posit that last year would have been an even more wonderful time.
Submitted by Rich Toscano on April 17, 2006 - 9:23am
The Union-Tribune recently issued a piece about last month's housing numbers. As is usual in the media these days, the tone was "cautiously optimistic." In other words, things have seriously slowed down, but the median price is still hanging in there... so things are going to be fine, right? Karevoll illustrates the sentiment nicely:
Submitted by Rich Toscano on April 13, 2006 - 8:45pm
The 10-year Treasury yield just busted through 5% for the first time in almost 4 years. Is the global liquidity party finally starting to wind down? Whatever's going on, it bodes poorly for the housing bubble.
Submitted by Rich Toscano on April 10, 2006 - 11:08am
Calculated Risk informs us that the new guidance on non-traditional mortgages may be with us in a few months.
Lansner at the OC Register is worrying about late tax payments, correctly identifying that homeowners are starting to get squeezed now that rates are rising and prices have flattened.
And—I know this is week-old news, but it bears repeating—the wonderful folks at the NAR inform us that 40% of homes purchased last year were for investment or vacation purposes. That, friends, is a little something we call speculative excess. But it's ok, says NAR: "Some of these purchases may be a third, fourth or fifth investment property, showing that housing is a good investment." Huh?
Submitted by Rich Toscano on April 7, 2006 - 11:01am
I've been very pleased in general with what's happened with the article comments and forums. A lot of really smart and sophisticated people have taken to posting, and I myself have learned an awful lot. Additionally, all the conversations have (hopefully) made this site more useful and interesting without me really having to lift a finger. (I don't always have time to repond to forum posts and comments, but I do read almost all of them).
Submitted by Rich Toscano on April 4, 2006 - 10:03am
Below we will take a look at the action in the housing market as we wrap up the winter season. Data to be crunched includes prices, price growth (or shrinkage) between varying regions, sales volume, and inventory. We'll also discuss the merits of the "median price" statistic as an indicator for real estate pricing power.
Submitted by Rich Toscano on April 3, 2006 - 9:45am
One of the forum participants, a long-time San Diego appraiser, has posted a really good summary of how things played out during the last down cycle in the local real estate market. I think it's very instructive for those of us who weren't punched in to the housing scene back then—so much so that it deserves to be its own post. Without further ado, quoting "Bugs":
Submitted by Rich Toscano on April 2, 2006 - 9:32pm
The Union-Tribune is running a story about the slowing Downtown condo market. They actually cite several examples of people losing money! Here's one example...
Submitted by Rich Toscano on March 29, 2006 - 6:03pm
You may recall that at the end of 2005, the OCC and friends released a proposed set of rather stringent lending guidelines. (See Is This the End of E-Z Credit? for a summary). The publication in question did not put guidelines into place, but rather explained the guidelines being discussed and requested comments from the banking community.
The draft rules didn't seem to scare anyone straight. Some lenders tightened up, but that seemed as much a symptom of credit conditions as anything. Meanwhile, in a desperate bid for more market share, some lenders have gotten even more risky since the document's original publication.
Submitted by Rich Toscano on March 26, 2006 - 9:24pm
This article will address recent mortgage rate movements along with important policy developments by the world's central banks. Executive summary: the credit market sure seems hell-bent on preventing a meaningful spring rally.
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.
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:
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.
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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