October was a down month for the median price per square foot.  By
this measure, detached homes were down .8%, condos by 3.3%, and the
aggregate number by 1.6%:

Remember that the condo median is very volatile, so the single family
number is probably giving a better read on what’s going on.  Any
way you slice it, though, it looks like overall prices dropped in
October.

The plain vanilla median, for what it’s worth, fared quite a bit worse:
down 2.6% for single family homes, 7.5% for condos, and 4.3% in
aggregate:

My Case-Shiller proxy unsurprisingly projects another down month in
October for the home price index:

Closed sales dropped slightly for the month:

Pending sales were ever so slightly up, however:

For the first time this year, inventory actually declined, albeit
slightly.  Inventory was 32% higher than last October.

Months of inventory improved mildly between September and October, but
still hovers slightly above the seemingly all-important 6-month level.

It looks like pricing continues to drift downward from the springtime
stimulus-driven peak.  And it’s no big
surprise, considering the deterioration in the supply-vs-demand
fundamentals of late.  As we head into the end of 2010, things
look very different than they did a year ago.  Consider the
following changes between October 2009 and October 2010:

Closed sales: down 19%
Pending sales: down 14%
Inventory: up 32%
Months-of-inventory: up 53%

Over that same year, valuations have not improved in the
aggregate.  In fact, October’s Case-Shiller proxy was 4% higher
than the October 2009 index value.

None of this bodes particularly well for San Diego housing in the near
term.  But it doesn’t portend disaster either.  (Check out
late 2007 on the charts to see what disaster looks like).  A
sideways-to-downward drift seems to me like a decent probability for
the months to come.

Of course, external factors could trip this forecast up.  One Ben
S. Bernanke will soon start conjuring $75 billion into existence each
month, and contrary to what many claim, I believe that it’s very
difficult to predict (or for that matter control) where newly printed
money will end up.  It’s not crazy to suggest that some of that
funny-money could eventually find its way into the housing
market. 

On the flip side, a sufficiently serious rise in yields as a result of
a panic out of US government (or government-backed, in the case of
Fannie and Freddie) debt could put the housing market disaster scenario
back on the table.  But given that money-printing is still
perceived to be a solution and not a problem, that is likely a topic
for further down the road.

For now, though, these are all just potential spanners in the works, as
the Brits say.  Until evidence to the contrary emerges, I’m
sticking with my downward drift thesis…