San Diego Housing Market News and Analysis
December Resale Data Rodeo
Submitted by Rich Toscano on January 10, 2009 - 4:26pm
The size-adjusted median price was down again last month for both property types, with a decline of 2.6% for single family homes and 7.8% for condos. The condo median price per square foot has now fallen over 50% from the September 2005 peak, forcing me to extend the Y axis downward in the chart below:
To be exact, the size-adjusted median condo price is down 51% from the peak. The single family size-adjusted median is down a mere 43%, and a volume-wighted aggregated of the two is down 45%.
The median looks pretty similar over the long haul, though the monthly noise is quite a bit worse:
As often discussed, part of the decline in the median-based indicators is probably due to the fact that cheap properties are moving faster. So my projection of the November and December Case-Shiller index declines might end up being a bit on the pessimistic side. Nonetheless, here is a chart of same:
After a steep drop in November, sales volume came back. My guess would be that the drop in rates is pushing some would-be buyers off the fence and overcoming at least some of the negative effects of the market meltdown.
Inventory for sale continued its gentle decline...
...resulting in another months-of-inventory reading below the 6 month mark. Total inventory has of course been a very poor indicator of any sort of market health, as the apparently reasonable level of overall inventory has been overshadowed by the fact so much of it consists of foreclosures and short sales.
The Fed is now officially creating money out of thin air in order to buy Agency debt and mortgage-backed securities, pushing mortgage rates down to unnaturally low levels. This is a radical act that flies in the face of what used to be considered sound central banking. I mention this just to show how desperate the government is to prop the whole edifice up. And there is a lot more intervention to coming, housing and otherwise.
Yet thanks to unemployment, foreclosures, a general move towards reasonable lending standards, and still not great valuations, the fundamentals for housing are still poor.
The clash between these two forces -- poor housing fundamentals vs. cyclopean government intervention -- will be a big part of what 2009 is all about.
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