October 2012 Resale Housing Data Rodeo

Submitted by Rich Toscano on November 19, 2012 - 7:29pm
Prices flattened out or maybe declined last month, depending on how you want to look at it... while the much less volatile detached home median price per square foot actually rose by .3%, the condo median ppsf declined by 3.3%, leading to an aggregate decline of .5%.



The above chart begins at the bubble peak; for kicks I made one starting from the 2009 trough:



You can see what I mean about much greater month-to-month volatility in the condo ppsf.  For what it's worth, I tend to pay a lot more attention to the detached home series for that reason.  The detached numbers can be further smoothed by taking the 3-month average, which I have done in the chart below in an attempt to approximate what the Case-Shiller index (which also uses the 3-month average for detached resale homes) will show when it comes out:



Now let's move on to inventory, the lack of which has been helping out prices all year.  As is typical this time of year, inventory has been falling -- what's unusual is that it does so from such a low level:



The chart above includes both active and contingent (typically a short sale awaiting bank approval) inventory.  You could argue that contingent inventory isn't really "on the market" (at least not at the moment, though it may return to the market) -- in this case, it's really only active inventory that new buyers can go after.  And contingent inventory has reached an all-time high compared to active inventory, as the following chart shows:



Here's how things look if we just chart actives:



Note that there is about half as much active inventory as there was a year ago!  And yet, sales volume is the highest (for October) in at least three years:





As a result, months of inventory is plumbing new lows:



Here's the chart I've been emphasizing that shows the strong relationship between months of inventory and prices:



Prices do tend to weaken in the fall and winter months, but I wouldn't expect much of a price decline for as long as months of inventory remains so exceedingly low.

(category: )

Submitted by spdrun on November 19, 2012 - 9:53pm.

Good.

Submitted by moneymaker on November 28, 2012 - 5:11am.

It would be interesting to see the San Diego months of resale inventory going all the way back to 2000. Wonder if this was what really caused the peak/frenzy leading up to the peak in 2005/2006.

Submitted by Rich Toscano on November 28, 2012 - 8:00am.

moneymaker wrote:
It would be interesting to see the San Diego months of resale inventory going all the way back to 2000. Wonder if this was what really caused the peak/frenzy leading up to the peak in 2005/2006.

Unfortunately that's as far back as I have it. But, months of inventory was super-low during the hottest times, getting to its lowest iirc in spring 2004. I wouldn't say it was the cause of the price rise, though... it was the effect of the insatiable demand driven by the bubble mentality and super-easy financing.

Submitted by carlsbadworker on November 29, 2012 - 5:04pm.

With inventory shrinking and price rising, I wonder if people have wrongly accused the "government manipulation" on this board. After all, the US housing market has a good crash and it now seems to be a short one as well.
It might be shorter if we remove all the "government manipulation" starting from middle of 2008, but three years at the bottom is not that bad, comparing to other countries. Unless, people think we haven't seen the end of it yet. But almost every indicator right now is saying that the worst is behind us:
http://www.forbes.com/sites/trulia/2012/...

Comment?

Submitted by moneymaker on November 30, 2012 - 9:53am.

I would say that now is similar to pre boom times. Although money is not "loose" it is certainly cheap to those with access to it. So with low interest rates, so much money sitting in cash, and low inventory, I think it's triple witching time for the "rich" to start a real estate bubble of their own. I predict in the next 2 years a small bubble that will run real estate up 50%.

Submitted by carlsbadworker on December 2, 2012 - 9:22pm.

2 years is a bold prediction, but 50% is not. We can get 50% by 7% a year for 6 years. As flu said in other thread, we got 12% this year. So at this rate, we just need 3-4 years for 50%.

Submitted by livinincali on December 5, 2012 - 11:02am.

carlsbadworker wrote:
2 years is a bold prediction, but 50% is not. We can get 50% by 7% a year for 6 years. As flu said in other thread, we got 12% this year. So at this rate, we just need 3-4 years for 50%.

What evidence over the long term is there for 7% appreciation in home values. The 10+% per year during the bubble was an extreme outlier, traditionally you might get 2-3% at best over 10 year time frames. This past year just happened to produce a situation where December 2011 marked a low point so things are up, but look at the past 2 years, 3 years, or 4 years, and the return are low single digits even after the 12% gain.

Submitted by carlsbadworker on December 5, 2012 - 11:22am.

livinincali wrote:

What evidence over the long term is there for 7% appreciation in home values. The 10+% per year during the bubble was an extreme outlier, traditionally you might get 2-3% at best over 10 year time frames. This past year just happened to produce a situation where December 2011 marked a low point so things are up, but look at the past 2 years, 3 years, or 4 years, and the return are low single digits even after the 12% gain.

You are right. It is probably nonsense. I wrote that reply after reading this:

http://finance.yahoo.com/news/the-15-bes...

But I think traditionally, it should track inflation which is not going to be up that much in the next few years.

Submitted by moneymaker on July 30, 2013 - 7:26pm.

Could I have been right? Stay tuned.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.