~Welcome to the Econo-Almanac~

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:

  • New visitors are advised to begin with the Bubble Primer or (if wondering about the site name) the FAQ list.
  • Housing articles I’ve written are found in the main section below.
  • Discussion topics posted by site users are found in the “Active Forum Topics” box to the lower right.
  • This website is an avocation; by day I help people with their investments as a financial advisor*.  Market commentary, an overview of our investment approach, and more can be found on my firm's website.

Thanks for stopping by…

September Prices and Sales

Submitted by Rich Toscano on October 20, 2006 - 8:34am

It's time for the belated monthly sales data roundup. Let's dive right in...

Median prices were down year over year for all involved:

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Back to Work

Submitted by Rich Toscano on October 18, 2006 - 7:35pm

Hi everyone - I am back in action after a road trip with the missus up beautiful Highway 1. I need a little time to put together the most recent housing data; in the meantime there is a sneak peak at voiceofsandiego.org.

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A Wrench in the EZ-Credit Works

Submitted by Rich Toscano on October 7, 2006 - 11:24am

Last week, a consortium of federal regulatory agencies released their long awaited "Guidance on Nontraditional Mortgage Product Risks." The linked-to press release tells us exactly what they mean by "nontraditional":

These products, referred to variously as "nontraditional," "alternative," or "exotic" mortgage loans (referred to below as nontraditional mortgage loans), include "interest-only" mortgages and "payment option" adjustable-rate mortgages. These products allow borrowers to exchange lower payments during an initial period for higher payments later.

As Will Carless pointed out back in June, 70 percent of San Diego home loans in 2005 were of either the interest-only or payment-option type. So it would appear that the new regulations put some of San Diego's favorite loan products directly in the crosshairs.

Some highlights of the new guidelines follow:

read more at voiceofsandiego.org

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A Word from Our Sponsor

Submitted by Rich Toscano on October 6, 2006 - 9:31am

Some readers wanted to know more about my semi-cryptic reference to "the new gig," so I thought I'd provide a little more detail here.  Don’t worry, I'm not going to start incessantly shilling for the new business. However, I may occasionally shill for the new business. Like now, for instance.

I have joined an existing firm called Pacific Capital Associates*. The firm offers "comprehensive financial planning" -- investment management, estate planning, insurance, and the like.  They also offer real estate services and home loans, although they are firmly in the real estate bear camp and have routinely talked people out of buying. (And I’m proud to say that they have never put a single client into an Option ARM).

What I do is talk to people about their finances, make recommendations, and directly manage their investment portfolios.  This investment management is the primary focus of what I do, and I employ the same analytical approach to global investment markets -- independent, fundamentally-based, and forward-looking -- that I have taken with San Diego real estate.

I'd be happy to meet with any Econo-Almanac readers who would like to get my thoughts on their financial situations or on investing in general. It doesn't cost anything, and there will be absolutely no pressure – I may be the least salesy guy on Earth.  I simply talk to people and help them make informed financial decisions.  After that, if it is appropriate and desired, I can help implement a plan or manage investments (and it is only at this point that any cost is incurred).  If you're interested, please e-mail me at rtoscano@pcasd.com and we can set up an appointment.

While on the topic of scheduling, I am leaving town next week so the site will probably be devoid of content during that time.

Okay, we now return you to your regularly scheduled doom-mongering.

* - Pacific Capital Associates offers securities and investment advisory services through Girard Securities, NASD/SIPC

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Rates On the Decline

Submitted by Rich Toscano on October 5, 2006 - 5:17pm

After what seemed like an unstoppable rise since the beginning of the year, long-term mortgage rates have since plummeted in an equally relentless manner.

Here in San Diego, though, the majority of buyers do not use 30-year fixed rate mortgages like those depicted by the blue line in the chart. The local housing market is influenced less by fixed rates than by adjustable mortgage rates, the the decline in which has been less dramatic.

read more at voiceofsandiego.org

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September Inventory

Submitted by Rich Toscano on October 3, 2006 - 8:36pm

It definitely appears that inventory has peaked for the year:

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Double Logins

Submitted by Rich Toscano on October 3, 2006 - 9:38am

If you are finding that you have to log in multiple times, just hit refresh a couple times after the first login. It ends up that you are actually logged in, but you are seeing a cached version of the page which makes it look like you aren't logged in yet. By refreshing the page a couple times you should get a "new" version which will reflect your logged-in status.

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A Year or Two?

Submitted by Rich Toscano on September 27, 2006 - 1:49pm

People now widely acknowledge the once-blasphemous: that the housing market can slow, that home prices can decline, and that both of the above are happening here and now. But we are a cheerful people, apparently, and such admissions are often quickly followed with the disclaimer that the housing market should be back in action soon enough.

Take, for instance, the following quote from El Cajon Councilman Gary Kendrick, as appearing in a recent U-T article on El Cajon's stalled condo conversion market. Mr. Kendrick is singled out only because this is a very typical example of the many similar proclamations I've heard expressed by assorted authority figures in recent times. Says Gary:

“It's simply the market cycle that happens every few years, and right now we are in a cooling-off period and that may last a year or two,” he said. “Three years from now, people will be saying, 'I wish I bought one of those condo conversions in 2006.' ”

Well, maybe I'm singling him out a little bit because that last line is so priceless. You may wish to record it for future generations to enjoy.

read more at voiceofsandiego.org

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Is Inflation Dead?

Submitted by Rich Toscano on September 26, 2006 - 10:14am

Sorry about the radio silence this past week... I've been real busy getting the new portfolio management/financial advisory gig* off the ground**. What writing I did get a chance to do over at the voiceofsandiego.org concerned the Amaranth blowup, not housing, so I didn't link to it from here.

Now I am compelled to come out of hiding because of bond yields.

I made note a while back when the yield on the 10-year Treasury Note finally crossed the elusive 5% mark. The 10-year yield eventually rose to 5.24%, but as the below chart (courtesy of StockCharts.com) shows, it went into freefall soon thereafter.

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Expanding Homeownership?

Submitted by Rich Toscano on September 20, 2006 - 11:25am

Yesterday, Scott Lewis wrote a great piece on the logical inconsistencies of some of the the city's affordable housing efforts.

One such policy, while having escaped Scott's truculent attentions, nonetheless deserves to be highlighted as especially irrational. It is described in a recent Daily Transcript piece called "Sanders seeks action on affordable housing" (subscription required):

...the [San Diego Housing Commission] is continuing its efforts to expand homeownership through the creation of two new, first-time homebuyer programs...

Giving people money to buy houses artificially stimulates housing demand (sorry, "expands homeownership"), the effect of which is to render housing less, not more, affordable. It's effectively a government subsidy for the housing bubble and entirely the wrong way to approach the problem.

read more at voiceofsandiego.org

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A New Home for the Econo-Almanac

Submitted by Rich Toscano on September 19, 2006 - 10:43am

The site was getting a little big for its britches, usage-wise, so this past weekend I moved it to a more powerful server. I believe I (eventually) got everything working on the new machine, but if you encounter any problems, please let me know.

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August Home Sale Data

Submitted by Rich Toscano on September 15, 2006 - 11:39am

As we've all heard by now, year-over-year median price comparisons continue to decline. Here's a picture of resale median prices:

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Median Problems

Submitted by Rich Toscano on September 13, 2006 - 8:44pm

Now that this month's housing data has arrived, I thought it would be a good time to briefly review the trouble with the "median price" as a measure of real estate pricing power.

Many observers, noting that the median home sale price was 2.2 percent lower in August 2006 than in August 2005, would assume that the typical home is now worth 2.2 percent less than it was a year ago. But this assumption is not necessarily correct. Because while the median price is a decent measure of how much the typical buyer paid, it does not tell us what that typical buyer got for the money.

When it comes to measuring actual changes in home market values, the median price can be thrown off by the following:

read more at voiceofsandiego.org

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Mystery Solved... Kind Of

Submitted by Rich Toscano on September 7, 2006 - 7:22pm

The plot thickens. Or maybe it... thinnens. I don't know. The point is that the folks at the San Diego Chamber of Commerce have gotten to the bottom of our recent mystery about why their population data differed so much from that of the Census Bureau. Yet their answer has only raised another question.

The Chamber's Rachel Laing elaborates:

The mystery of the difference in the migration data on the Chamber's Web site and the U.S. Census bureau appears to have been solved. Kelly Cunningham, who headed the ERB for years before leaving in early 2005, helped us sort all of this out.

To sum it up, the Chamber uses California Department of Finance data, because the state agency is assumed to have better ability to track and estimate the state's population changes. They also release their estimates in a more timely fashion -- months ahead of the Census Bureau. SANDAG also uses DoF data over the Census Bureau data in its planning.

read more at voiceofsandiego.org

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More Job Dissection

Submitted by Rich Toscano on September 6, 2006 - 9:27am

As a follow-up to the prior post ("Job Dissection"), I wanted to zoom in on the past year and have a look at how the various industries have fared more recently. The results are found in the accompanying chart.

Construction is up 3 percent from last year. This makes sense--as housing demand erodes, developers are scrambling to finish their construction projects sooner rather than later.

read more at voiceofsandiego.org

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