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Escoguy
7 years ago

Thank you Rich!
Your new

Thank you Rich!

Your new dataset confirms what I’ve been thinking. It will be very interesting to see if more supply comes online in the spring.

One trend I have noticed, is the quality of product coming on the market at an affordable price (<$650K) doesn't seem to be as good as a couple of years ago, older homes, smaller, more remote locations. I know this subjective, but there is very little affordable in key zip codes. Most new construction in the RB/56/Carmel Valley area is at least 850K. Who knows when the ECB runs out of European bonds to buy, maybe they will buy US treasuries keeping our rates lower for longer with the idea to spur US consumption and imports. Some countries are experimenting with a minimum income like Finland and New Zealand. Could it be global demand is so poor? In any event, it is hard to see interest rates rising materially in this global economic climate. Must say very glad to be in the US now. From a policy standpoint, best remedy for housing would be to allow tax abatement for infill developments on a small to medium scale, but it would probably take a decade and tens of thousands of new units to make a dent in supply. Really don't know if the political will is there to allow for more infill in older areas of the city/county. While as a property owner (multiple SFHs) I am thankful for the appreciation, it is a concern when younger workers leave the area due to lack of affordable housing. For now job growth and household formation is a strong positive, but many of the new households are older than in past cycles so that trend may be more vulnerable in the mid term. Good luck all!

spdrun
7 years ago
Reply to  Escoguy

In any event, it is hard to

In any event, it is hard to see interest rates rising materially in this global economic climate. Must say very glad to be in the US now.

Wouldn’t you rather be in Spain where flats are being foreclosed left and right? And where you can get a very good return on property since people still have to live somewhere.

It’s like Detroit with a better climate ๐Ÿ™‚

an
an
7 years ago
Reply to  spdrun

Nope. I want a repeat of the
Nope. I want a repeat of the 70s, where after 10 years, my property will be worth 3x more a rent also went up 3x.

bewildering
7 years ago
Reply to  an

Does anyone know why Redfin
Does anyone know why Redfin no longer shows houses in Escrow? They used to show ‘pending’ houses, but in my area this no longer happens.

biggoldbear
7 years ago

Thanks Rich!
Can you graph

Thanks Rich!
Can you graph the *Active* Inventory vs. price change? It looks like that might match the past few years even better, and better represent the 2013 jump.

biggoldbear
7 years ago
Reply to  Rich Toscano

Rich Toscano
[quote=Rich Toscano][quote=biggoldbear]Thanks Rich!
Can you graph the *Active* Inventory vs. price change? It looks like that might match the past few years even better, and better represent the 2013 jump.[/quote]

Isn’t that the second graph? Or am I misunderstanding what you mean?[/quote]
Oops, you are right. I got used to seeing active vs total graphs side by side and forgot that was at the top. Feel free to delete these comments to avoid any confusion.

natesactm
7 years ago

With a 2 year old and a 1 one
With a 2 year old and a 1 one year old, my family had outgrown the 2 bedroom bungalow in NP that we’ve been renting for 3 years. Late last year we began searching for a home in the uptown area. These charts confirm my anecdotal experience with 3 months of trying to purchase. The low levels of inventory constantly comes up in conversations with realtors and lenders. Nice homes are off the market within days and the remaining inventory that sticks around a bit longer is either overpriced or misguided flips (craftsman on the outside, open concept urban loft on the inside) or in need of a full renovation, but not discounted as such. We get door knockers offering to purchase semi-regularly at our current house. A big jump in prices leading into spring seems likely. Just signed a lease on a new rental. Going to sit this market out for the time being.

XBoxBoy
7 years ago

A big thanks for doing this!
A big thanks for doing this!

gzz
gzz
7 years ago

Thanks for the update! Rates
Thanks for the update! Rates are headed down again and inventory is nearing its all-time lows. Should be a good year.

Disagreeing with me (and your graphs) is Zillow, which said the value of my Ocean Beach houses fell off a cliff in August 2015, down about 17%. It is not just mine, it says Ocean Beach values fell more than 10% the past year. All the sales 10-20% above their zestimate, one after another, will not change their mind.

woodrow
7 years ago

Are we at the forefront of a
[img_assist|nid=25776|title=Are we at the forefront of a bubble?|desc=Rich, have you looked into San Diego’s home valuation index recently? With mortgage rates receding and currently global conditions I’d be interested to see where prices are historically on an affordability basis. It seems like a foregone conclusion that we will see significant upward pressure on prices this year, and I’m wondering where we sit on the potential “bubble” scale. I don’t sense a bubble, but the data would be interesting to see. Something like this chart you produced a couple years ago for VOSD (see chart above).|link=node|align=left|width=100|height=75]

bewildering
7 years ago
Reply to  woodrow

I believe the most recent
I believe the most recent version of this chart was here:
http://piggington.com/shambling_towards_affordability_midyear_2015

In the last “shambling towards affordability, Mid-year 2015”

SD investor
SD investor
7 years ago

Hi Rich,
Thanks as always. I

Hi Rich,

Thanks as always. I have been learning from your website for the past few years. I was wondering if you think the next recession will have as big of an impact on housing prices? Assuming the next recession is not led by housing this time, I am think it might be a mild effect rather than a crash. Was just wondering what you thought? Any plans for you to sell the house you purchased during the downturn?

Also, how do you calculate the active inventory? I am doing my own analysis using MLS, when I select residential (active and back on market) and I am getting ~5886 right now, which is a bit higher than your chart.

Much obliged,

SD Investor.

spdrun
7 years ago
Reply to  Rich Toscano

Do you have graphs for rents
Do you have graphs for rents vs payments, and income vs payments, vs the equal-weighted thing?

I’d like to see income vs payments without the rent component, since rent is also subject to a bubble.

Escoguy
7 years ago
Reply to  Rich Toscano

spdrun,
I also agree with

spdrun,

I also agree with Rich. Rents may be much higher than a few years ago but it doesn’t mean anything will suddenly deflate.

From my perspective, there is a range of landlords:
On one end of the spectrum: some are content with below market rent to maintain long term tenants. Such landlords usually have multiple properties and less debt.

On the other end: some landlords want to maximize every last dollar every time. They may own only one property and have higher levels of debt. Some of these perhaps shouldn’t be landlords if they don’t have the staying power through a downturn.

And of course there is a range between them. I can see that aggressive landlords may need to occasionally lower the asking price if they went to high but I am often surprised that listings which look over priced still seem to find takers without took long a wait. Right now in San Diego county (from Chula/Vista to Vista and to about 8 miles east of the 15), there are only about 300 3+BR homes/condos for rent, and only 47 4BR homes below $3300/month. Most of these are on the market for less than a few weeks. So yes supply is extremely limited and doesn’t imply falling rents anytime soon.

I could see that rent growth may slow down at some point in the coming years, but that would require a slowdown in household formations and population growth. Last year about 30,000 new residents moved to SD which is over 10,000 households. But only about 250 new homes were built below 500K countywide or 2% of the overall household growth for moderately priced homes.

I think SD/SoCal will attract more international buyers as they discover it and compare it with home. With over 18 million, millionaires in the world, there are many would would want to own a second or third property here while prices are cheap compared with locales such as Vancouver, San Fran or even a little north in Orange County.

Core logic shows a housing price forecast of up to 10% price growth for the coming year.

Building on Rich’s question, I’d like to know how we’d see forecast an adjustment in high rents based on data. Otherwise it’s just wishful thinking which isn’t’ actionable unless you buy or move away.
Good luck

spdrun
7 years ago
Reply to  Escoguy

Regardless — why not break
Regardless — why not break out the graphs with price vs rent and price vs income?

My feeling is that rents have been more volatile than average incomes though the last re-cession.

As far as foreigners — dollar is nice and strong right now, cutting their purchasing power. Unless they already had money in US accounts.

mixxalot
7 years ago
Reply to  spdrun

Chinese are dumping money to
Chinese are dumping money to escape China to buy US real estate.

Escoguy
7 years ago
Reply to  mixxalot

There has been a meaningful
There has been a meaningful move up in prices in the past 90 days so will be interesting to see the April data when it comes out.

I think inventory levels are deceptive as they don’t factor the quality of the home other than perhaps sf.

So even if the same batch of homes as ten years ago reaches peak prices, in some cases, the prices are higher as the homes are now older/need repairs/etc.

I’m referring mostly to homes built prior to 1980-1990 as their layout/amenities aren’t comparable with homes built say after 1990.

mixxalot
7 years ago

That would explain why El
That would explain why El Cajon, Santee, and La Mesa asking prices are SKY HIGH! I mean 600-800K for a crap shack that is 30 miles from the coast? Crazy!

Escoguy
7 years ago

Several homes in
Several homes in neighborhoods I track have gone pending within a week at prices in the 700-900K range. Must say I’m a little stunned but with so little inventory, seems to be a new leg up.

joec
7 years ago
Reply to  Escoguy

Escoguy wrote:Several homes
[quote=Escoguy]Several homes in neighborhoods I track have gone pending within a week at prices in the 700-900K range. Must say I’m a little stunned but with so little inventory, seems to be a new leg up.[/quote]

Yeah, until inventory gets back to 6 months level, I don’t think prices will move lower at all…we’re in 1-2 months supply?

I also see a lot more rentals and prices are pretty insane. Up 25% more/month rent in my hood…

Also, people who bought in the last downturn have so much equity already.

Escoguy
7 years ago
Reply to  joec

Agree 100%, I’m seeing rents
Agree 100%, I’m seeing rents for 4BR at $3300-$3800/month which last year might have been $2900-$3000.

And there aren’t that many available thus the higher prices.