Before we begin, let me get a couple instances of pimping out of the way.
First, I will be on "These Days" on NPR this coming Monday, April 13, at 9:00AM.
Second, I will be on a VoiceOfSanDiego.org panel called "The Economy: Where Are We Really?" on April 23. Details can be found here. Rock star realtor and media sensation Jim Klinge will also be there, along with the Voice’s Kelly Bennett and USD economist Ryan Ratcliff.
Incidentally, I always turn down "panel" invitations for a variety reasons, not the least of which is that they are fairly nerve-wracking. But since the Voice was putting this one on I figured I should be a team player and participate. So feel free to attend if you want to see me all uncomfortable and whatnot.
OK, onto the rodeo.
The size-adjusted median fell for the month, as we’ve all come to expect:
As has often been the case in recent months, this metric deteriorated more for condos than single family homes, with the former being down 4.1% in March compared to just 1.3% for the latter. The single family decline was milder than it has been of late — perhaps a bit of "spring rally" trying to struggle through.
Here’s a chart of the vanilla median, which exhibited similar behavior:
And here’s a chart of the projected decline in the Case-Shiller index. This approximation, based on the size-adjusted median, has overstated the decline in the CS index lately, so take it with a grain of salt.
Volume continued to be pretty good, all things considered, equalling the level of March 2007 — an increase of nearly 50% over a year ago.
Single family sales continue to outstrip condos sales on a year-over-year basis — not surprising in light of the relative weakness in condo prices.
For-sale inventory declined for the month, ending down about 26% from last year.
And the months-of-inventory figure ended up at a multi-year low of 5.2 months:
The inventory decline notwithstanding, March saw an all-time high of 4,260 mortgage default notices — over 60% higher than the number of sales. So inventory may be declining and sales may be increasing, but distressed properties (which is to say, future/potential bank-owned properties) continue to pile up really fast.
As I’ve noted, I am impressed with the level of sales activity considering the severity of the economic downturn (although government-subsidized mortgages with artificially low rates certainly play a huge part in stoking said activity). But there is a large and fast-growing overhang of potential foreclosure properties that have not even hit the market yet. It’s hard to have much confidence in the housing market as a whole for as long as that continues to be the case.
April 8, 2009 @ 10:08 PM
Rich – I’m excited for you to
Rich – I’m excited for you to be on These Days. That’s pretty cool. Will Tom Fudge be the one to do the interview/discussion?
As far as inventory decline, do you think that the incentives/tax breaks, in addition to the lower prices have an effect on why the sales inventory is being depleted?
Also, when a property goes pending, is it included in the inventory? In other words does the inventory decline only upon closing?
Also, I have noticed quite a few properties that have just been removed, not sold or pending. It is possible that a good many loans are actually being re-worked and loan mods being implemented w/rates and principle reduced?
April 8, 2009 @ 10:52 PM
Rock star realtor and media
Rock star realtor and media sensation…
very funny, I get one little mention in an out-of-town newspaper……it’s not like I’ve been on nationwide TV or something.
I’m waiting for the head fake of the year – the median sales price starting to rise. When that happens, the bottom-callers will be out in force.
But what it’ll really signify is that the higher-end sellers are starting to capitulate, and, as a result, the additional sales will better balance the measuring of the median price – causing it to increase.
Rising median price = more higher-end sales, caused by their lower prices.
April 8, 2009 @ 11:41 PM
jim – there’s bottom callers
jim – there’s bottom callers already on SDL b/c of the declining inventory. I guess all the NODs are going to be re-worked and rates and principle reduced so all the NODs will magically disappear. Then miraculously overnight the banks will start lending to the kid w/the lemonade stand and before you know it V. Just like that!
Edit – I just went to the KPBS site and I guess Maureen Cavanaugh is now the host. Nevertheless, I’m looking forward to hearing the show!
April 9, 2009 @ 2:32 PM
I can’t believe people would
I can’t believe people would be calling the bottom now. The decline has not been slowing, and we still have plenty of room to fall before we get to 2000-2001 levels. My situation is very typical for us in East Lake / Chula Vista. I 100% financed a new condo in mid-2005 for about $360k (yes, I was a stupid first time buyer who thought I was going to be priced out of home ownership if I didn’t ‘get in while I still could’). The area was all built new in 2004-2006.
My neighbor with an identical unit can’t get an offer above $165k. The bank won’t approve short sale for under $200k. With all the 5 year mortgage resets just now coming online for the 91913/91915 zip codes, what do you think is going to happen? Only an idiot would hold on to such a severely upside down condo like mine.
It doesn’t matter if we can afford to pay the mortgage – the condo market has already reached the point where abandonment is the wisest economic decision. Condos are going to keep diving and diving. I see now way to fix that.
April 9, 2009 @ 2:53 PM
wooga – I’m getting hammered
wooga – I’m getting hammered on SDL b/c according to them I’m just paralyzed w/fear and that’s why I’m not buying now at bottom and I’ll be missing the opportunity of a lifetime. I guess I’ll just be a renter forever.
(They must all be realtors or had been in a previous life)
April 10, 2009 @ 10:46 AM
jpinpb wrote:wooga – I’m
[quote=jpinpb]wooga – I’m getting hammered on SDL b/c according to them I’m just paralyzed w/fear and that’s why I’m not buying now at bottom and I’ll be missing the opportunity of a lifetime. I guess I’ll just be a renter forever.
(They must all be realtors or had been in a previous life)
I wouldn’t say that. Many (including me) have told you to wait if you want to buy at or near the coast – no way has that area come down enough.
Some of us (myself included) are now seeing price points we’re comfortable in parts of San Diego County, specifically inland and north county areas, but I don’t think anyone thinks the coast has seen it’s fair share of depreciation.
But if I were wedded to the idea of living within 5 miles of the coast? No way would I buy right now.
April 10, 2009 @ 11:26 AM
Thanks, SDE. I intend to
Thanks, SDE. I intend to wait. I agree that are areas that are pretty darn low and doable, even condos along the coast have show some hefty declines. I don’t have a fear of buying any more than I have a fear I’ll never be able to buy.
April 10, 2009 @ 4:05 PM
update: For anyone who was
update: For anyone who was intending to listen, I just found out I will be on NPR at 9AM, not 9:20.
April 10, 2009 @ 4:13 PM
Thanks, Rich. Looking
Thanks, Rich. Looking forward to it. In case some of the Piggs are at work, I think you may be able to listen to episodes on These Days
April 13, 2009 @ 10:10 AM
Hey Rich, good show. You are
Hey Rich, good show. You are becoming quite the celebrity. I may have to ask for your autograph whenever/if we have another meet up 😉
April 13, 2009 @ 10:33 AM
Thanks JP… 😉
Thanks JP… 😉
April 14, 2009 @ 5:36 PM
Just listened to your
Just listened to your NPR interview, and you were great! 🙂
You’re right about the “affordability” when one only considers monthly payment. Still, it’s seems odd that price/rent and price/income ratios are back to “normal”. Perhaps that’s because we’re looking at the mid-high neighborhoods, where prices have not come down nearly enough yet (and you did mention this). Things are still mighty lofty around these parts.
You’ll do wonderfully on the panel, Rich. Good luck! 🙂
April 14, 2009 @ 10:21 PM
Thank you CAR!
Thank you CAR!
April 10, 2009 @ 8:48 AM
That is just the same
That is just the same crap that RE bulls have been saying forever. Bascially saying you are paralised with fear to buy at the current bottom means two things.
A) these people have a crystal ball we have all been looking for to know this is the bottom. Just because housing prices, most likley understated in agrigate due to the sales mix, are not stupid anymore doesnt mean we are at a bottom. It means things are not stupid anymore, atleast in certain markets.
and B) that now is a good time to buy. Funny, I seem to be remembering that phrase from before. Say, Cerca 2005? I doubt those same people saying that you are too fearful have ever not been saying that “now is the time to buy”. (Though I doubt they are all RE agents, more likly homeowners desperate to see prices go back up, either cause they NEED it (bubble buyers) or because they want it (‘bottom’ buyers looking to cash in ASAP).
(not trying to preach to the choir on this one)
April 10, 2009 @ 9:21 AM
Wooga…I think when you
Wooga…I think when you think of “bottom” you can’t lump in all areas and all property types.
The lower tier SFR’s, say <$350k-$400k, I would say may be close to a bottom. There are 10 offers (sometimes 40 offers in the case of a $285k Mira Mesa REO house that probably got bid up to $325k) on the well priced starter SFR's immediately and they get bid up well above asking. This is in areas like Oceanside, Escondido, East County, and South Bay. In fact they may have close to bottomed in spring of 2008. The starter SFR's are not falling in price any more (in some cases even rising in price) and there is not a lot of inventory and a TON of buyers. People in San Diego can now flat out afford starter SFR's with full doc, full amortized loans. Sometimes the PITI is LESS than their rent! When's the last time that's happened in Coastal CA!!! On the other hand, condo's and the >$500k SFR’s probably have a lot more room to fall. Condo’s are in a LOT of trouble because lenders are being REALLY picky about which ones they will lend on, and it creates a negative cycle.