San Diego Housing Market News and Analysis
April Resale Data Rodeo
Submitted by Rich Toscano on May 6, 2008 - 4:55pm
There was actually a glimmer of good, or at least not-bad, news in the resale data last month.
But first, prices. As measured by the size-adjusted median price, they continue to drop: down 3.3% for single family homes, .3% for condos, and 2.3% in volume-weighted aggregate:
Here is an update of my proxy Case-Shiller HPI incorporating the April data. Interestingly, the proxy HPI is now down precisely the same amount from its peak as the aggregate size-adjusted median: 28.0%
The plain-vanilla median managed to climb a bit for detached homes but fell for condos, resulting in an aggregate rise of .3% for the month. The median resale price is down 25% from the peak, which appears to understate the actual decline but is at least in the ballpark.
The bad news for the market is that prices appeared to decline again despite this being a time of typical seasonal strength. The lack of a spring rally in 2007 boded poorly for the rest of the year... and so far in 2008 the spring rally is a no-show.
The good news is for the market that volume picked up pretty substantially.
It was coming off pretty dismal levels, and sales are still below where they were last year. But it's a big improvement over the earlier part of the year. The average year-over-year decline for January, February, and March of this year was 30.7%, versus a year-over-year decline of 13.4% in April.
At the same time, inventory grew very slowly considering the time of year and, while still higher than it was at this time last year, closed the gap a bit.
As a result of the above two trends, the months-of-inventory figure plunged to levels not seen since round two of the credit crisis began last year.
So what does it all mean? One really helpful puzzle piece was supplied by SD Realtor a couple weeks back. He posted some data showing that while volume has declined in many higher end areas, it is actually up quite substantially in some of the areas that have really been crushed (e.g. Eastlake).
His conclusion was that the price declines have gotten so bad in some areas that buyers are starting to creep back in. But where the prices have been stickier, demand remains quite weak. This is a sensible analysis and I tend to agree. If this is what's going on, and volume is still the good leading indicator it once was, those hard-hit areas are likely closer to the bottom than the rest of San Diego.
BTW this is another example where the aggregate data I put up runs into analytical limits, and I really appreciate people posting some of the more detailed data (e.g. SD Realtor's data and esmith's zip code-level HPI) now that I don't have as much time to spend on this site as I used to.
There's one other twist to the question. The months of inventory figure has declined, but that measures sales against "want to sell" inventory. What's arguably more important is the number of sales vs. "must sell" inventory. It could well be that even as the total amount of inventory declines, must-sell inventory is steady or even rising. I attempt to proxy this relationship with my sales-per-notice-of-default charts. Perhaps the next update of that chart will fill in some blanks, but given that we've just been at or near all time high default levels and that defaults generally represent future must-sell inventory, it doesn't seem like there is a real danger that must-sell inventory will decline much any time soon.
All that said, sales volume is a very important leading indicator, so this is a development to watch in future months. For the time being, however, the housing bust marches on.
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