San Diego Housing Market News and Analysis
October 2010 Resale Data Rodeo
Submitted by Rich Toscano on November 5, 2010 - 7:31pm
October was a down month for the median price per square foot. By this measure, detached homes were down .8%, condos by 3.3%, and the aggregate number by 1.6%:
Remember that the condo median is very volatile, so the single family number is probably giving a better read on what's going on. Any way you slice it, though, it looks like overall prices dropped in October.
The plain vanilla median, for what it's worth, fared quite a bit worse: down 2.6% for single family homes, 7.5% for condos, and 4.3% in aggregate:
My Case-Shiller proxy unsurprisingly projects another down month in October for the home price index:
Closed sales dropped slightly for the month:
Pending sales were ever so slightly up, however:
For the first time this year, inventory actually declined, albeit slightly. Inventory was 32% higher than last October.
Months of inventory improved mildly between September and October, but still hovers slightly above the seemingly all-important 6-month level.
It looks like pricing continues to drift downward from the springtime stimulus-driven peak. And it's no big surprise, considering the deterioration in the supply-vs-demand fundamentals of late. As we head into the end of 2010, things look very different than they did a year ago. Consider the following changes between October 2009 and October 2010:
Closed sales: down 19%
Pending sales: down 14%
Inventory: up 32%
Months-of-inventory: up 53%
Over that same year, valuations have not improved in the aggregate. In fact, October's Case-Shiller proxy was 4% higher than the October 2009 index value.
None of this bodes particularly well for San Diego housing in the near term. But it doesn't portend disaster either. (Check out late 2007 on the charts to see what disaster looks like). A sideways-to-downward drift seems to me like a decent probability for the months to come.
Of course, external factors could trip this forecast up. One Ben S. Bernanke will soon start conjuring $75 billion into existence each month, and contrary to what many claim, I believe that it's very difficult to predict (or for that matter control) where newly printed money will end up. It's not crazy to suggest that some of that funny-money could eventually find its way into the housing market.
On the flip side, a sufficiently serious rise in yields as a result of a panic out of US government (or government-backed, in the case of Fannie and Freddie) debt could put the housing market disaster scenario back on the table. But given that money-printing is still perceived to be a solution and not a problem, that is likely a topic for further down the road.
For now, though, these are all just potential spanners in the works, as the Brits say. Until evidence to the contrary emerges, I'm sticking with my downward drift thesis...
~Active forum topics~
~SD Home Price Snapshot~
|* Rich Toscano is a registered representative of and offers securities and investment advisory services through Girard Securities, Inc., a registered Broker/Dealer, Registered Investment Advisor, and member FINRA/SIPC. Pacific Capital Associates is not a subsidiary or affiliate of Girard Securities. The views and opinions expressed on this site are not those of Pacific Capital Associates or Girard Securities, Inc. The information on this site should not be construed as investment advice.|