December 2012 Resale Data Rodeo

Submitted by Rich Toscano on January 21, 2013 - 7:06pm
The median price per square foot rose again last month.  Here are the stats...

Month to month:
  • 1.9% for detached homes
  • 1.4% for attached homes
  • 1.8% in aggregate
For the Year 2012:
  • 12.6% for detached homes
  • 18.0% for attached homes
  • 14.0% in aggregate
Here's a look at this price measure since the March 2009 trough:

...and the same thing since the bubble peak in September 2005:

Here's the Case-Shiller index with an estimation of the last two months based on the resale data:

This continued price strength was foreshadowed by the very low levels of inventory (measured in months, to capture both supply and demand):

As for inventory, it's just continued to plummet.  Granted, that usually happens into the end of the year, but the following graph (which measures inventory in terms of units for sale) shows that 2012 inventory was much lower than in recent years.

Splitting things out by year as in the above graph is useful for data with a seasonal influence, so you can compare a month in a given year against the same month in another year.  But, you don't really get as good a read on the long-term trend, hence the following graph, which shows the same data (units of resale inventory) starting in 2007:

Sales have been brisk enough, as the following graph shows, but they haven't been significantly stronger than in recent years:

So clearly, the decline in months of inventory has been driven mostly by the dramatic drop in homes for sale, as opposed to the pickup in sales volume.

Here is a look at months of inventory since 2007.  This is the same as the blue line in the third graph, just not inverted (again, to give a better visual on what was happening).

The above graph kind of understates how low we are, because of the scaling required to show the crazy spike during the worst of the housing crash.  Perhaps the percent decline is easier to internalize: year-over-year to December 2012, months of inventory declined by 38% (all of that happened in the first few months of the year, by the way).

I'll wrap it up the same way I did for the past year or so: for as long as months of inventory stays this low, I would expect the price pressure to be to the upside.

Could this change?  Yes.  Candidates include more inventory (maybe brought out by higher prices), economic weakness, or higher rates, off the top of my head.  I expect all of these things to happen to some degree eventually, but they haven't yet, and who knows when they will.  For now, the market remains very inventory-constrained and prices are likely to continue reacting as they have been.

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Submitted by moneymaker on January 25, 2013 - 8:43am.

Excellent graphs and analysis. I don't think that this can continue without a pop somewhere. Looks like many of the foreclosures have worked through the system. With no increase in sales and dimishing supply I think the market becomes more prone to erratic moves (which way is hard to say) the odds are something will change soon. I wish data was available for the last bubble,to see if the fuzzy correlation worked then too.

Submitted by MistaVista on January 24, 2013 - 10:28am.

I agree Money maker something has got to give. I go back and forth over whether I should try to purchase anything just to have something that will gain equity and allow me to work my way up market or to continue to rent and save. I just don't see the current prices lasting. When homes are going for $500k in east Clairemont, It leads to flashbacks of 2006. I feel as if I have been priced out of the market in the last 6 months alone. The bidding wars are out of control and the inventory is non existent. Its not easy looking for a starter home with a young family these day and its even more difficult determining what side of the fence to jump to in a market that seems unstable.

Submitted by SD Squatter on January 24, 2013 - 6:18pm.

I wonder how is the San Diego house affordability now. The latest graphs by Rich are over a year old:

Submitted by Rich Toscano on January 24, 2013 - 6:31pm.

SD Squatter wrote:
I wonder how is the San Diego house affordability now. The latest graphs by Rich are over a year old:

It's on my list... :-)

Submitted by spdrun on January 25, 2013 - 10:11am.

Meanwhile, I've seen a few investment condos (1's and 2's) that are still decently priced, and have got accepted offers on two, all in the last few months. It's much easier when your only criteria are a non-scary neighborhood and the possibility of 7.5+% cash flow.

Perhaps the best plan these days is to buy purely for cash flow and use the cash flow to rent something wherever you want in the County. (Or really anywhere in the world...) Non-investment property just ties you down.

Submitted by SD Squatter on January 25, 2013 - 1:15pm.

Rich Toscano wrote:
SD Squatter wrote:
I wonder how is the San Diego house affordability now. The latest graphs by Rich are over a year old:

It's on my list... :-)


Submitted by sdduuuude on January 25, 2013 - 3:28pm.

I'm wondering, adjusting for inflation, in what year did housing prices first hit the current level ?

Submitted by spdrun on January 25, 2013 - 3:52pm.

Where? San Diego city? SD County? North County? The whole country?

Submitted by Jazzman on January 25, 2013 - 8:30pm.

Are there any data that shows the trend for REOs to other sales, and how the tiers behave. I'd be interested in knowing the numbers that support where it has gone. Looking at these charts, it can't be ordinary sellers because a) what makes 2012 so different from previous years, and b) did they all suddenly collude? A wild guess says the dearth of inventory points to 40% institutional investors syphoning off trustee sales, 40% lenders REO constipation, and 20% seller eternally-hopefuls.

Submitted by sdduuuude on January 30, 2013 - 4:16pm.

spdrun wrote:
Where? San Diego city? SD County? North County? The whole country?

Whatever Rich's graphs cover.

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