February 2015 Housing Data Rodeo

Submitted by Rich Toscano on March 22, 2015 - 5:44pm

As of January, there was a big divergence between pending and closed sales: closed sales were very weak (even considering the seasonality), but pendings were strong.  This gap narrowed substantially in February as closed sales made a big catch up move.  Check it out in the graph below... closed sales were unusually low in January, but a lot closer to recent years (albeit still somewhat low) in February.

Pending sales on the other hand were not at all weak in January, a fact which augered the rebound in closed sales.  And they were similarly strong in February -- so we should expect further catch-up in closed sales.

Now this is all relevant to ye olde supply and demand thing.  The strength in pendings implies fairly strong demand, somewhat higher than last year.  Where does supply stand?  Very similar to this time last year, it turns out:

Flat supply and increased demand translates to a lower months-of-inventory reading:

Now, the current months of inventory is quite low on an absolute scale:

...but that's the norm for this time of year.  You can see that we were at the same level in the beginning of 2014, but as the year progressed, supply and demand got back into a better balance.

And as we know, this key metric of supply vs. demand is generally a great indicator of near term price pressure:

The graph above implies that the current level of inventory should put upward pressure on prices.  And they did indeed rise in February...

But these are still the somewhat dead winter months, and months of inventory could change pretty dramatically as the market gets going, as happened last year.

If months of inventory stays at these levels, we are looking at some potentially signicant upward price pressure.  But, please note the "if."  We will get a better idea over the next couple of months as the spring season kicks in.

Graph dumping ground below:

(category: )

Submitted by bewildering on March 24, 2015 - 11:24am.

Historically low inventory. This is really odd considering prices are pretty high.

Submitted by starbucksmom on March 29, 2015 - 9:40am.

Age-old question - Is this a good time to buy? I'm currently renting and quite happy doing so, but would also like a place to call my own. Just would like something to build a bit of equity and not sure if the timing is right in Temecula right now.

Submitted by Escoguy on March 31, 2015 - 10:03pm.

If you go on Redfin and filter, >1300 sf, 3BR, less than 1M, built after 2000, there are about 600 properties on the market.

Sure the 6,000 number looks reassuring but there is basically no inventory in a meaningful sense. With population increases an and longevity, supply will stay tight.

Submitted by moneymaker on April 24, 2015 - 5:51am.

Esocoguy there is no <1300 sf filter on Redfin, it's 1250 or 1500. But I did do a similar search for a newish (>2000) house and in all of san diego county if one wanted a 3/2 house with no HOA for under 500K then one would have to want to live in Julian or Borrego. There are no new SFH in San Diego county with no HOA that are affordable.

Submitted by spdrun on April 25, 2015 - 8:39am.

No shame in buying an oldish house. > 2000 la-de-freakin-dah!

Mira Mesa: http://www.realtor.com/realestateandhome...

Submitted by brokerforyou on January 14, 2016 - 5:01pm.

Great article. Yes, low housing inventory is one thing but really do not think it will offset rising interest rates at falling disposable income in San Diego as well as in California.

Nobody is taking into account the diminishing disposable income of potential buyers in California.

Here is a link, to what I consider my own more realistic outlook for the San Diego housing market as well as California in general for 2016:

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.