Articles that I have written for VoiceofSanDiego.org, a local news publication that provides continuing coverage of San Diego housing and economic issues.

Mortgage Rate Update

Submitted by Rich Toscano on July 1, 2008 - 4:44pm

We haven't paid much attention to mortgage rates of late, a fact that is understandable given that the real action in the mortgage market has involved defaults on high-risk loans rather than incremental rate changes. But let's check back in on the topic.

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Alt-A Pain Still Ahead

Submitted by Rich Toscano on June 27, 2008 - 3:08pm

I'll just say up front that this is one of those lame blog posts that links to another person's blog post and then appends a little extra commentary at the end, which is exactly the type of blog post that one might expect on a Friday afternoon in late June.

The linked-to blog post in question comes from local real estate luminary Jim "The Realtor" Klinge, and it offers up a host of data comparing subprime and Alt-A mortgages in California. The difference, to put it simply, is that while "subprime" describes mortgages given to borrowers with low credit scores, "Alt-A" describes high-risk mortgages granted to people with better credit scores.

I've long argued that subprime loans weren't the only ones at risk of default, and Jim's data (sourced from the New York Fed) shows that this is true. (For instance, 23.5 percent of Alt-A loans have late payments over the past two years.) But what interests me most about Jim's post is that it suggests that much of the Alt-A pain may still be pretty far in the future.

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Prices Way Down, Sales Way Up

Submitted by Rich Toscano on June 17, 2008 - 10:21pm

Last week I noted that May had been another good month, as these things go, for home sales. But there is more to the story, as you might expect. Just as there has been a huge disparity in price declines between different areas of San Diego, the recent surge in sales activity has been every bit as uneven.

Using the zip code-level sales data kindly offered up by our pals at the Union-Tribune, I collected information on all zip codes that had more than 20 sales either in May 2007 or May 2008. I put the resulting list in order based on the year-over-year change in sales activity, with the biggest sales increase at the top. Then I took some averages for the top 20 zip codes (those with the biggest increases) and the bottom 20 (those with the biggest decreases). The two lists are here for anyone who wants more detail.

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Return to 2003, Again, or Possibly 2002

Submitted by Rich Toscano on June 2, 2008 - 9:31pm

As promised, here is a followup chart to Friday's article on how long it's been since home prices were at current levels.

This chart once again uses the Case-Shiller index to track San Diego home prices but adjusts those prices for the effects of inflation as measured by the Consumer Price Index. By taking account of inflation, we can observe how expensive housing is (and was) not just in dollar terms, but compared to everything else.

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Return to 2003

Submitted by Rich Toscano on May 30, 2008 - 12:45pm

Earlier this week we examined how much home prices have fallen in percentage terms. Let's now look at things a different way: how far have prices fallen in terms of time? In other words, how long ago was it that prices were last at their current levels?

The accompanying chart attempts to answer this question using the three tiers of the Case-Shiller home price index in addition to the overall index for San Diego. To find the appropriate months, I just took the March value of each index (the most recent available, unfortunately) and noted what prior month was closest to the March figure.

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Foreclosures Climbing the Economic Ladder

Submitted by Rich Toscano on May 23, 2008 - 6:11pm

I recently wrote that San Diego's more upscale housing sub-markets aren't out of the woods just yet. One of my arguments concerned the behavior of the region's more creditworthy borrowers: it's not that they stayed away from risky loans during the boom, just that the types of loans they tended to get took longer to reset than the subprime loans that are currently blowing up all over the county's less expensive neighborhoods.

For a visual I point you to the mortgage reset chart hosted on the always-informative Calculated Risk economics blog. While I suspect that San Diego was a little ahead of the nationwide figures represented on the chart, the fact remains that the types of risky loans often taken out by the well-heeled have barely begun to reset. (This March article offers a more in-depth treatment of the afore-linked chart and the topic of Option ARMs, mortgages that can cause particular trouble upon recast given their negative-amortization payment schemes).

Now a bit of evidence for higher-end mortgage distress is starting to trickle in.

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Employment Sector Winners and Losers

Submitted by Rich Toscano on May 1, 2008 - 8:03pm

Earlier this month, we saw that San Diego employment declined on a year-over-year basis in March -- something that hadn't happened during the last recession (nor for 15 years, according to the U-T).

The accompanying graph shows how many jobs were added year-over-year by the top four sectors for employment growth how many were lost by the bottom four sectors. Over each bar, I have noted the average hourly wage within that sector (for some reason, the BLS site does not report government sector wages -- perhaps they consider that a little too personal).

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BailoutWatch: I Can't Even Keep Up

Submitted by Rich Toscano on April 23, 2008 - 11:16am

When I wrote the first installment of BailoutWatch this January, I intended to post occasional updates to keep readers apprised of the ongoing housing bailout efforts. Well, the truth is that I haven't even been able to keep up.

That column wasn't even the first on the subject -- it had followed hot on the heels of this one. Since the January post, the bailout attempts have been coming fast and furious. They've also been getting progressively more irresponsible and transparent in their attempts to reward the very institutions that enabled the housing bubble in the first place.

Let's go through a selection of recent bailout-related developments.

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Employment Goes Negative

Submitted by Rich Toscano on April 18, 2008 - 7:01pm

San Diego employment has just decreased on a year-over-year basis, falling by 1,700 jobs between March 2007 and March 2008.

That is a very small drop in the grand scheme of things, representing a decline of just .1 percent. But it's the first time in a long time that employment has turned negative at all. The data I pulled from the Employment Development Department website goes back to the year 2000, and it shows that even during the recession and slowdown that took place at the beginning of this decade, the weakest month showed a year-over-year increase of 2,300 jobs.

So even though we are not in an officially recognized recession, San Diego's employment situation is worse than it ever got in the aftermath of the 2001 recession.

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Employment's Been Weak for a While

Submitted by Rich Toscano on April 11, 2008 - 1:17pm

The latest Quarterly County Employment and Wages (QCEW) report came out this week. You may recall from a prior article on the topic that this employment survey is quite a bit more accurate than the monthly employment estimates, but that it is typically ignored because it lags by six months.

You may also recall that I advanced the theory earlier this year that the statistical adjustments employed by the agencies that put out these numbers were causing job growth to be overstated. Shortly after I wrote that article, this thesis was vindicated with the arrival of revised estimates showing that San Diego employment growth had indeed been much weaker than initially reported.

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Fence Sitters Will Be Sorry

Submitted by Rich Toscano on April 9, 2008 - 5:06pm

Our favorite housing cheerleader, Chuck Smiar, is back in the news again today with another attempt to scare real estate fence sitters into action. After issuing a warning to hesitating homebuyers that they were "in for a surprise" back in December, Chuck had this to say in a North County Times piece earlier today:

"There's a lot of buyers sitting on the fence waiting for the bottom. And I think if they don't jump in soon, they're going to be sorry."

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Desirable Yes, Immune No

Submitted by Rich Toscano on March 31, 2008 - 9:51pm

For years, people claimed that because San Diego was such a desirable place to live, local real estate was immune to price declines. We know how that turned out. Yet these days that same argument is often applied to San Diego's more upscale areas.

It seems, at first blush, to hold up. High-end San Diego homes have certainly weathered the housing bust far better than their lower-priced counterparts. This can be seen in last week's Case-Shiller home price graphs, which show that the high end of the housing market has fallen in price less than half as much as the low end. And the Case-Shiller high tier -- which aggregates price movements of the most expensive one-third of San Diego homes -- understates some notable resilience in swankier sub-markets such as Point Loma, Mission Hills, La Jolla, and much of the North County Coastal region.

The relative strength in these areas has led to the widespread conclusion that the high-end markets are desirable enough to be more or less invulnerable to the housing bust.

I am skeptical of this interpretation.

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Local Employment Growth Falters

Submitted by Rich Toscano on March 21, 2008 - 1:13pm

The California Employment Development Department's employment estimates for February indicate that San Diego job growth has essentially flattened out. The sectors that thrived during the housing boom are now suffering through the bust, and while employment is growing outside of the housing boom industries, it is doing so barely enough to offset the housing-related losses.

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Fantasy in the Real Estate Business

Submitted by Rich Toscano on March 13, 2008 - 9:58am

Have a gander at some of the nonsense that flowed from a recent gathering of real estate agents and their friends, as reported by the North County Times.

The last portion of the conference, a question-and-answer session, admonished the media for depressing consumer confidence by focusing on only the negative aspects of housing data...

George Chamberlin, a panelist at the event and columnist for the North County Times, said that some news reporters biased their reports because they are jealous of homeowners.

Most real estate agents who spoke at the conference seemed to agree, with one agent suggesting that agents and builders pull all advertising from newspapers until positive articles are printed.

It appears that the desperate and completely discredited gambit of blaming the media for the housing downturn is still with us.

Let's go over this one more time.

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Job Growth Not What it Used to Be

Submitted by Rich Toscano on February 29, 2008 - 5:40pm

Last month I noted that despite local data points and expert opinions pointing to a slowdown in the retail industry, the California Employment Development Department reported that retail industry employment was growing at a fairly healthy pace. To explain this disparity, I offered the hypothesis that the "birth-death model," a statistical adjustment applied by the EDD in order to model the number of new businesses coming into existence, was overestimating the number of jobs being created by new businesses. (The prior article goes into vastly more detail, for those interested).

Today, the EDD released the January job data as well as revisions to the 2007 numbers. The revised numbers indicate that job growth in the retail sector -- and overall, for that matter -- was indeed quite a bit lower than the EDD had previously estimated.

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