San Diego Housing Market News and Analysis
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I started this website in mid-2004 to chronicle San Diego’s spectacular housing bubble. The purpose of the site remains, as ever, to provide objective and evidence-based analysis of the San Diego housing market. A quick guide to the site follows:
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Submitted by Rich Toscano on January 26, 2007 - 2:37pm
It's commonly maintained that home price declines could only take place in the face of widespread job loss. There is something to this idea, but it is not precisely correct. In truth, it is forced sellers who put downward pressure on home prices.
These are the owners who need to accept whatever price they can get for their homes. Absent forced sellers, home prices will likely hang tough because sellers won't have any good reason to accept lower bids. But when the number of people who have to sell grows too much in comparison to the number of willing buyers, prices start heading down.
It's certainly true that unemployment can increase the ranks of people who need to sell their homes, which in turn leads to price declines. Where the conventional wisdom goes wrong is assuming that unemployment is the only possible cause of forced selling.
Submitted by Rich Toscano on January 24, 2007 - 8:59pm
Anyone wondering who funds all the high-risk home loans about which I write incessantly may find a recent Financial Times piece enlightening. The FT article tells us what's on the minds of correspondents from the enigmatic world of structured finance, that seemingingly endless supplier of funding to (among others) ever more questionable home buyers.
Submitted by Rich Toscano on January 19, 2007 - 5:30pm
Last month, I wrote about the decline in mortgage rates during the latter half of 2006, noting that real estate might have fared worse if not for the tailwind provided by falling rates.
Submitted by Rich Toscano on January 16, 2007 - 5:54pm
The new year has opened up with signs of life in the housing market and a chorus of pundits proclaiming that the worst is behind us. Could it be true? Will the residential real estate market fare better in 2007 than it did in 2006?
As I survey the scene, I am left with the distinct impression that it will not. Every indicator of housing market health seems to be in worse shape now that it was a year ago.
Submitted by Rich Toscano on January 9, 2007 - 10:17am
It was another down month as measured by the size-adjusted median price:
Submitted by Rich Toscano on January 5, 2007 - 4:13pm
November registered another month of positive job growth, but troubles in the construction and real estate sectors are starting to take their toll.
Submitted by Rich Toscano on January 3, 2007 - 10:57am
While we were out, the San Diego Daily Transcript ran a story (subscription required) pointing out that over 3,000 condo units are currently under construction downtown. Additionally, another 7,000 downtown units are either approved or proposed.
How many of those latter 7,000 will actually be built is open to question. But friends in the industry tell me that once a building is under construction, the odds are high that it will be finished, which implies that most of those 3,000 units in progress actually will be built to completion.
Submitted by Rich Toscano on January 2, 2007 - 10:40am
It's time to rise up against your oppressors and make your voice heard!
Ok, on second thought, that sounds pretty hard.
Instead, why don't you make your voice heard by casting a vote in the first annual Real Estate Blogging Awards, for which the Econo-Almanac has been nominated in the "Brain Power" category. (Thanks to user bub for posting this in the forums.)
Submitted by Rich Toscano on December 28, 2006 - 10:03am
Well, he finally came out and said it outright:
NAR Chief Economist David Lereah said the data held "mixed news" but it broadly signaled a stronger housing sector with inventories and sales stabilizing.
So there you have it -- with an apparent lack of any doubt or question, Lereah called the bottom on December 28, 2006. Remember this one for the history books, my friends.
Submitted by Rich Toscano on December 28, 2006 - 10:01am
I have installed a filter to automatically encode URLs into clickable links, so commenters will no longer have to do so manually. I am tremendously relieved to report that the filter also truncates those overly long, layout-destroying URLs we (at least those of us who use Firefox) have all come to know so well. So something like this:
...will now look like this:
Submitted by Rich Toscano on December 20, 2006 - 8:45pm
One argument I hear a lot is that foreign demand for local real estate has grown substantially in recent years, and that such foreign demand will be supportive of prices in the future.
Unfortunately, this argument puts the cart squarely in front of the horse. Investors from other countries are well known to be the very last participants to arrive at the scene of a financial bubble. They are the last to hear about all the riches to be made, the last to buy in, and the last to realize that the party is over.
Submitted by Rich Toscano on December 19, 2006 - 9:44am
Let's check back in with the denizens of EZ-Ville for a look at how things are going after the early-December shakeout.
For starters, I wish to address one poster's comment to assert that I feel completely justified in having called the decline in the ABX "disorderly." The falling-off-a-cliff section of the graph represents a 25% increase in the cost of insuring subprime mortgage backed securities (from 316 basis points to 395 basis points, per this Dow Jones piece among others) in precisely one week. That doesn't seem very orderly to me.
That said, subprime CDS index price managed to stabilize after the decline and have since begun to ratchet back upwards, as the red line indicates:
Submitted by Rich Toscano on December 17, 2006 - 4:16pm
The causes of the housing market's well-documented ills, whatever those causes may be, do not appear to include interest rates.
The average rate on a 30-year fixed mortgage has declined steadily since July and now rests near levels not seen since 2005. The average 1-year adjustable-rate mortgage (ARM) rate has likewise fallen, but still rests above its early 2006 levels.
Submitted by Rich Toscano on December 16, 2006 - 12:37pm
I don't have a lot to add to this statement by Chuck Smiar, president of the North County Association of Realtors, as quoted in the North County Times:
I just wanted to get it on record for future reference.
This article originally appeared at voiceofsandiego.org.
Submitted by Rich Toscano on December 14, 2006 - 9:06am
Last week's NY Times piece on home price metrics (login required) prompted some forum discussion on the accuracy of the Case-Shiller home price indices, which I use for all my long-term price charts. It ends up that I looked into their methodology a while back and have been meaning to write about it -- so now seems like as good a time as any!
To start with, let me quote from an old voiceofsandiego.org piece as a means of reviewing the problems with the median price:
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