February 2009 Resale Data Rodeo

Condos were whacked hardest again last month, at least as measured by the size-adjusted median price. That price indicator was down 6.4% for condos between January and February alone. The detached home size-adjusted median was down 3.0%, with a volume-weighted aggregate of the two down 3.8%.

From the September 2005 peak of the series to last month, the size-adjusted median price was down 45.3% for single family homes, 54.5% for condos, and 48.3% in aggregate.

I wrote a bit about the potential distortion caused by the rush to cheaper inventory over at voiceofsandiego.org… due to my abject laziness, I will excerpt it here:

The well-documented shift in buyer preference towards lower-priced homes is causing these numbers to overstate the total price decline. But not by a whole lot. We can try to assess the impact of the shift towards cheaper properties by comparing the size-adjusted median price to the Case-Shiller index, which measures subsequent sales of individual single-family homes and is thus a much more accurate price measure.

The Case-Shiller index was most recently update for December, at which time it showed a 39.2 percent decline from the peak. Because the index is based on sales taking place in the previous three months (October, November, and December, in this case), the December index number actually best represents November pricing.

Thus, we should compare the December Case-Shiller index reading to the November size-adjusted median price. As of November, the size-adjusted median for single family homes had declined by 41.1 percent from the peak — 1.9 percent more than the Case Shiller index.

So the green line in the accompanying chart does overstate actual detached home price declines, but only to a very small degree in the grand scheme of things.

Since the Case-Shiller index doesn’t measure condo prices the same comparison can’t be performed for that property type. This is too bad, because the substantially larger decline in the size-adjusted condo median leads one to wonder whether there is some greater distortion in the median-based condo price indicators — or whether the condo market has indeed been spanked that much harder.

In any case, here’s a gander at the plain vanilla median, where the disparity between condos and detached homes is even bigger:

And here is my projected decline in the Case-Shiller index, based on the detached home size-adjusted median. Bear in mind that due to the distortions discussed in the Voice excerpt above, this projection method has recently tended to predict a bigger decline in the Case-Shiller index than actually ended up happening.

Sales volume was good again, down for the month in what seems to be a typical seasonal pattern, but still higher than either of the past two years.

Interestingly, volume has increased a lot more for single family homes than for condos. The following chart shows the year-over-year change for each month since Feb 2008. While both property types have improved on a year-over-year basis, the improvement has been dramatically higher for detached homes (and this has been the case since mid-2008).

Inventory rose a bit — also seasonal — but was lower than at any time during the prior two years:

As you’d expect given the above, the months of inventory figure also put in a good showing:

Of course, the low months of inventory hasn’t been a great indicator on account of that whole foreclosure onslaught/economic meltdown thingy. February marked an all-time high for mortgage default notices — but I will do a dedicated post on that soon.

Still, the one bright spot is that sales activity continues to hang in there. Given all the people either being laid off or in fear of being laid off, that’s kind of impressive. It will be interesting to see if we get the traditional surge in March. If so, then that market definitely has that buyer interest going for it. But there’s plenty going against it too — and all the sales activity is still not yet enough to stop the price decline.