~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…

July 22 housing data: more evidence of price declines, and another jump in months of inventory

Submitted by Rich Toscano on August 17, 2022 - 8:18pm
Hey all, sorry for the delay... I've traveling, but I wanted to at least put some charts up. Mostly just charts but here are couple quick observations:

First, the probability grows that there was something to last months' price decline, as we've had another month at that price level. (See the prior update for musings on how much of the decline was real vs. noise). Still, I put a ton more weight on the (unfortunately 2-month lagging) Case-Shiller index than on the median price/square foot.

Second, look at that move up in months of inventory. In just a few months, we've gone from epic lows to middle of the road post-bust levels. I'm very curious to see where that months of inventory figure goes from here.

More below!

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June 2022 housing data: interest rates starting to bite

Submitted by Rich Toscano on July 13, 2022 - 8:28pm
Well... single family home prices look like they dropped a lot last month, but I suspect there is a lot of noise in that data point. In specific -- the price per square foot was down 5.6% from May. Though I think current valuations are unsustainable and wouldn't be surprised by declining prices, that's just too big a decline in one month to be "genuine."* Supporting this idea is the fact that condos (usually much more volatile than single family homes) only dropped 1.5% in price/sq ft terms.

*(What I mean by this is, the price per square foot is a pretty crude proxy for how much a given house has changed in value. It can get thrown off by compositional effects such as people buying more low price/sqft homes in cheaper areas, or fewer homes in expensive areas, etc. This is what I'm talking about when I allude to "noise" or the decline not being entirely "genuine.")

So let's wait for the Case-Shiller index on this one, and in the meantime say that prices likely dropped last month but not as much as that stat makes it seem.

Anyway! Interest rates are biting in other areas too. Here's pending sales -- down 21% from the prior month, and 40% from a year ago:

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May housing data: something's got to give

Submitted by Rich Toscano on June 20, 2022 - 10:01am
Prices were down a (very) wee bit last month:

Inventory started to build:

Pending sales hung in there from the prior month, but are still lower than a couple months ago. It's probably the case that many people going pending last month still had lower rates locked in.

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April housing data: some slowing but still low inventory/higher prices; real monthly payments surpass bubble peak

Submitted by Rich Toscano on May 11, 2022 - 8:51pm
I don't have too much to add to what I wrote last month, so I'll mostly stick to charts for now and refer people to last months' writeup for the color commentary.

Just a couple quick notes on April:

1. There was was a notable drop in pending sales:

2. This pushed months of inventory above last year's level (but still extremely low in the grand scheme of things):

3. Inflation-adjusted monthly payments are now comfortably above the bubble peak:

Given the lags in real estate transactions (rate locks, escrow periods, etc.), it might take some time for the full impact of the higher rates to be realized. The next couple months should be more informative on that front.

In the meantime - more graphs below and some thoughts/ranting on these valuations in the prior entry.

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Monthly housing data: no inventory, prices up, rates up, affordability horrendous

Submitted by Rich Toscano on April 14, 2022 - 1:57pm

As of March, there was still nothing for sale. In fact we hit an all-time (in my data) low in months of inventory:

Prices rose accordingly:

Speaking of things going up really fast -- 30 year mortgage rates just hit 5%. This was at 2.9% 6 months ago! This is a violent move, and because it started from such a low level, has a major impact on monthly payments. I've made a couple charts to try to visualize this impact.

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Valuation update: affordability just got a lot uglier

Submitted by Rich Toscano on March 21, 2022 - 8:56pm

The price valuation index looks not too different from the last update. It's crept up a bit, but it in the same (albeit historically quite high) ballpark.

The monthly payment index, on the other hand, looks quite different thanks to the recent pop in rates. The red line below shows that the ratio of monthly payments to local incomes and rents has exceeded its post-crash highs, and is now at a level last seen in mid-2003.

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February 2022 housing data - prices moving again

Submitted by Rich Toscano on March 14, 2022 - 9:23pm

Last month saw a big jump the single family median price per square foot:

Here's how it looks on the graphs -- a monthly move comparable to the height of last year's frenzy.

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January housing graphs

Submitted by Rich Toscano on February 18, 2022 - 4:27pm

December housing graphs

Submitted by Rich Toscano on January 16, 2022 - 6:10pm

November housing graphs

Submitted by Rich Toscano on December 12, 2021 - 12:31pm

October housing data - yet more of the same

Submitted by Rich Toscano on November 19, 2021 - 5:43pm
Home prices were pretty much unchanged last month, as the market continued to digest early 2021's massive price increase. And months of inventory remains pretty much rock-steady -- and at a quite low level, albeit not so low as the frenzy months earlier this year. The usual charts below...

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What's going on with housing? Plus valuation update (née shambling towards affordability)

Submitted by Rich Toscano on October 15, 2021 - 4:02pm
Over at my day job, we wrote a long piece attempting to get our heads around what's going on with housing. Check that out and if you're still awake at the end, here are a few bonus graphs:

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September 2021 housing data - ditto

Submitted by Rich Toscano on October 7, 2021 - 4:47pm
I have virtually nothing to add to last month's description... the market spent another month digesting the price overshoot during the frenzy period, and inventory continues to be off the lows but still really low. Not much to see here...

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August 2021 housing data - more of the same

Submitted by Rich Toscano on September 16, 2021 - 2:54pm
August looked a lot like July: no more frenzy, but still a very undersupplied market.

I want to note one thing about this graph, which compares months of supply (blue line, inverted) with monthly price changes (red line). Earlier in the year, we saw a very tight market as measured by a high blue line -- but the red line, prices, rose in excess even to that! At the time I speculated that there might be eventually be some price pullback to make up for that overshoot. It seems that might be happening now, as we are in the opposite situation... supply is still quite tight, and prices are rising, but less than we'd expect at this level of supply. So if you put those two periods together, they make sense. Based on the length of the frenzy overshoot, we may be looking at a few more months of more muted price increases (at least as compared to what one might expect at these supply levels).

Other than that... yeah, more of the same... prices were flat-ish, inventory increased a bit, but so did pendings so months-of-inventory was basically unchanged. IE: no more feeding frenzy, but still a very tight market. Graphs below...

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July 2021 housing data -- the frenzy is over, but the market remains undersupplied

Submitted by Rich Toscano on August 7, 2021 - 5:05pm

Prices backed off a bit last month, sales declined, and inventory rose. It seems that the market has finally come off the boil somewhat. However, supply is still quite low compared to demand, as measured by months of inventory. So while the panic buying phase seems to be over, this is still a strong market. Charts below.

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