San Diego Housing Market News and Analysis
August 2020 Housing data -- prices react to inventory shortfall
Submitted by Rich Toscano on September 14, 2020 - 1:36pm
Last month, inventory dropped to the lowest it's been since the bubble. Prices have moved up in response.
Sales continue to be strong... nothing spectacular, but showing no weakness at all:
Meanwhile, available inventory has dropped off a cliff:
The result: super low months of inventory:
As often discussed here, months of inventory is a good predictor of short-term price movements. This period has proven to be no exception, so far:
(For those unfamiliar: the blue line above shows months of inventory, inverted to make the relationship clearer -- lower inventory is represented by the line moving higher. The red line is monthly price changes.)
Here are a few price charts. I should convert these to log scale now that they are so long-term... in any case, the recent price surge is clearly more than the typical summer strength.
Here's summary table:
The market is clearly getting a big boost from low interest rates and the "COVID dynamic" (where people want to buy/upgrade, but nobody wants to sell). It's worth keeping in mind that both these things are (hopefully) temporary. Once life and the economy return to normal, both rates and the housing supply/demand dynamics should go back to where they were before.
One thing that might be permanent is an increased bias towards home ownership if a lot of people start to permanently work from home. That would be good for housing demand, but I have a feeling that the rates+COVID dynamic thing is a much bigger factor. And those will, at some point, be reversed. For now, though, the market is super tight and prices are responding accordingly.
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