San Diego Housing Market News and Analysis
December 2012 Resale Data Rodeo
Submitted by Rich Toscano on January 21, 2013 - 7:06pm
The median price per square foot rose again last month. Here are the stats...
Month to month:
...and the same thing since the bubble peak in September 2005:
Here's the Case-Shiller index with an estimation of the last two months based on the resale data:
This continued price strength was foreshadowed by the very low levels of inventory (measured in months, to capture both supply and demand):
As for inventory, it's just continued to plummet. Granted, that usually happens into the end of the year, but the following graph (which measures inventory in terms of units for sale) shows that 2012 inventory was much lower than in recent years.
Splitting things out by year as in the above graph is useful for data with a seasonal influence, so you can compare a month in a given year against the same month in another year. But, you don't really get as good a read on the long-term trend, hence the following graph, which shows the same data (units of resale inventory) starting in 2007:
Sales have been brisk enough, as the following graph shows, but they haven't been significantly stronger than in recent years:
So clearly, the decline in months of inventory has been driven mostly by the dramatic drop in homes for sale, as opposed to the pickup in sales volume.
Here is a look at months of inventory since 2007. This is the same as the blue line in the third graph, just not inverted (again, to give a better visual on what was happening).
The above graph kind of understates how low we are, because of the scaling required to show the crazy spike during the worst of the housing crash. Perhaps the percent decline is easier to internalize: year-over-year to December 2012, months of inventory declined by 38% (all of that happened in the first few months of the year, by the way).
I'll wrap it up the same way I did for the past year or so: for as long as months of inventory stays this low, I would expect the price pressure to be to the upside.
Could this change? Yes. Candidates include more inventory (maybe brought out by higher prices), economic weakness, or higher rates, off the top of my head. I expect all of these things to happen to some degree eventually, but they haven't yet, and who knows when they will. For now, the market remains very inventory-constrained and prices are likely to continue reacting as they have been.
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