San Diego Housing Market News and Analysis
December 2019 housing graphs
Submitted by Rich Toscano on January 21, 2020 - 9:22pm
Well, here's how the stats looked for the year:
Quite a change from December 2019, notably with months of inventory down 36%. It's no coincidence this took place alongside a steep drop in interest rates. I think the behavior of the past 2 years -- the rapid slowdown when rates rose, followed by a rebound when rates fell again -- makes it pretty clear that the housing market is very much beholden to continued low rates.
Here is what I believe to be the best indicator of short term market strength -- months of inventory (number of homes for sale divided by the number of pending sales in a given month).
You can see the serious weakness that took place in 2018, as mortgage rates rose to nearly 5%. Once rates dropped back down to the 4%-and-below level, months of inventory dropped to its typical (in recent years) levels.
The next chart shows that months of inventory (inverted on the chart) generally coincides quite well with monthly price changes. Current supply/demand levels are supportive of further price increases in the near term. But the charts above should serve as a cautionary tale... should rates abruptly increase as they did in 2018, the dynamics of the housing market could change just as fast.
More charts below...
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