San Diego Housing Market News and Analysis

San Diego employment growth continued its 2010 streak by rising for another month in April.

The graph below shows monthly San Diego employment since 2007:


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Here's something we haven't looked at for a long time: San Diego population growth and migration patterns.

This was a favorite topic of mine back in the day when San Diego's housing bubble cheerleaders implied some sort of population explosion via their favorite catch-phrase, "Everyone wants to live here."  In fact, San Diego's population was growing quite modestly at the height of the boom.  And San Diego's supply of housing was growing faster than its population.  And domestic migration was firmly negative, meaning that more Americans were moving out of San Diego than moving in.  The mild population growth was in fact due to foreign immigration and, moreso, to new San Diegans being born.  (My little joke at the time was that even Countrywide wasn't yet making home loans to fetuses).

But I digress.  The point is that this once-popular topic has lately been neglected here at Nerd's Eye View.  Let's have a look at the latest numbers:


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Since the second half of 2009, the general trend has been for the low-priced tier of the Case-Shiller home price index to rise strongly, the high-priced tier to drift mildly downward, and the mid-priced tier to split the difference with a more tempered increase. 

February bucked that trend.


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Late last year I wrote a series of posts comparing two sets of available San Diego job surveys.  The first was the "establishment survey," which polls local employers and attempts to measure the number of people working for San Diego businesses regardless of where they live.  The second was the "household survey," which polls San Diego residents in order to find out how many residents are working, regardless of whether they work in the county or not.  The household survey also includes the self-employed, while the establishment survey (as we'd expect from a survey of businesses) does not.

At the time of these articles, the two surveys were providing mixed signals...


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According to the California Employment Development Department's latest estimates, the San Diego economy added jobs in March and the year-over-year rate of employment decline fell to its slowest pace since December 2008.


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The median price per square foot of existing homes sold in San Diego County, after having gone pretty much nowhere since last fall, rose dramatically in the month of March.


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Last week's release of the Case-Shiller home price data for January showed that once again, prices for cheaper homes rose while those of more expensive homes stagnated.

I wanted to focus a bit more on this disparity by charting the home price tiers over multiple timeframes.  This first chart shows how much the tiers have rebounded since their respective troughs in early 2009:


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The February employment estimates are out and the downward revision to January employment that I anticipated did not come to pass.  In fact, the January numbers were revised slightly upward.


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Last month I discussed the idea of government-sponsored mortgage principal reductions, which I described as the "nuclear option" in the government's housing bailout arsenal.  As unjust and misguided a policy as this might be, I suspected at the time, principal reductions might well be on the way.

Well, the first volley of bailout nukes has been launched. 

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Last week we looked at how San Diego's various employment sectors fared during the year 2009.   Let's now widen the view a bit and measure job losses (and gains, in a couple cases) for these same sectors since the start of the recession.

Conveniently, for the purpose of this analysis, the recession is designated to have officially begun in December 2007.  So we can compare San Diego employment on that date with that of December 2009 without having to worry about the seasonal issues that arise when comparing different calendar months.

The chart below shows the number of jobs lost or gained in San Diego's major employment sectors as defined by the Bureau of Labor Statistics and Employment Development Department:


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Now that the revised job data for December is in, let's have a look at how San Diego's employment sectors fared during the year 2009.

This first graph displays the number of jobs lost (and, in a couple of cases, gained) in San Diego's major job industries as delineated by the Bureau of Labor Statistics:


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The latest estimates from the California Employment Development Department (EDD) indicated a decline in San Diego employment between December 2009 and January 2010.  But there is always a decline in employment between December and January, and as a matter of fact, this January's decline was estimated to be substantially smaller than usual.

And that's where it gets weird.


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The Case-Shiller data for December, released last week and covered in detail by Kelly, exhibited the same pattern that we have seen in recent months: prices in the high tier continued to drop even as the low tier rebounded further, with the middle tier and aggregate indexes more or less splitting the difference.


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A couple of interesting bailout-related items crossed my desk today.  I have given up on trying to keep track of all the bailouts, but these both relate directly to our beloved topic of shadow inventory so I thought I'd note them.

First, the White House is trying to ban any foreclosure unless the loan in question has been screened for HAMP, the government's flavor-of-the-month home loan modification program.  As I understand it, HAMP has been fairly useless, for reasons I will describe below.  But no matter -- an extra mandatory step to screen every mortgage for eligibility will further delay the foreclosure process, perhaps resulting in even more delinquent mortgages remaining in pre-foreclosure limbo.

The reason that HAMP and the government's other varied foreclosure prevention schemes haven't made much of a splash is that they don't address the main cause of foreclosures: that many homeowners owe more than their homes are worth.

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I haven't focused on new foreclosure activity for a while because the topic has become somewhat irrelevant, analytically speaking.  The question is not whether a large "shadow inventory" of foreclosed homes exists -- it does -- but whether and over what timeframe that inventory will actually become relevant by entering the market.   That being the case, the question of how fast the shadow inventory might be growing isn't terribly high on my list of compelling topics.

It is nonetheless at least mildly interesting to note that new foreclosures, as measured by mortgage default notices, have slowed substantially. 

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