San Diego Housing Market News and Analysis
May 2010 Resale Data Rodeo
Submitted by Rich Toscano on June 9, 2010 - 4:06pm
Before we begin the Rodeo, you might be interested in a piece I just put up at voiceofsandiego.org on National Froth Day, when we commemorate Greenspan's first utterance of that legendary euphemism.
Assuming you have now read the afore-linked piece, celebrated Froth Day, and eventually sobered up, let's move on the to last month's housing data.
Last month, you may recall, prices and sales were actually somewhat weak. I theorized that buyers were holding off on buying in April, waiting instead for the double tax credit opportunity beginning in May and accordingly putting downward pressure on April volume and prices. If this theory was correct, the market would surge starting in May.
And surge it did. The median price per square foot was up 3.0% for detached homes. This is a good month, but looks pathetic next to the 11.3%(!) increase in the condo size-adjusted median. A volume-weighted aggregate of the two was up 5.4%.
Now we all know there is noise in this data, and that it is particularly bad in the condo series where we just have a lot fewer data points. But numbers like that are dramatic enough to indicate that actual prices rose last month.
This was a rare month where the plain vanilla median was actually less volatile than the median price per square foot. The aggregate vanilla median was up 4.1%.
Here's a look at the Case-Shiller proxy. Composed as it is of single family prices, the wacky 11% condo number had no effect. Still, the index was up an unusually large 2.6% for the month.
Supply and Demand
Volume boomed as we entered double-dip season, up 17% from the prior month and 9% from a year ago:
Meanwhile, inventory continued to creep up. Inventory was flat to down for pretty much the entirety of 2008 and 2009, but it's been on a sustained rise since 2010 began. That's something new.
Incidentally, the increase in inventory is in the active category, as opposed to the contingent category, meaning that the increase is due to new for-sale homes hitting the market as opposed to a backlog of short sales caught up in the approval process.
The surge in demand far outstripped the additional supply, so the months-of-inventory figure dropped back to near-2009 levels:
Evidence suggests that the "holding out for the double-dip finish line" thesis is correct. If so, the market should remain strong as we enter the second and final month of the double-dip here in June.
After that, I would expect weakness in July as the pressure goes into reverse and buyers try to pull their closings forward into June.
Sometime after that, the California tax credit kitty will be run down. Though it might not be that long at all. According to the FTB site, as of June 1 the first-time buyer credit was already over 50% used up, just one month into the program. At that rate the tax-credit gravy train will have left the station before double-dip season is even over.
So if none of the assorted credits get renewed, we could see a serious lull starting in July or so. But, perhaps in honor of Froth Day, the market is partying it up in the meantime.
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