January housing graphs

Submitted by Rich Toscano on February 18, 2022 - 4:27pm



























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Submitted by sdrealtor on February 19, 2022 - 10:37am.

Looking at this all shows how dire the inventory situation is. Last year it was low and we’re almost 40% below that. When you look at the last 10 year trend pre pandemic you see we should be somewhere around 6000 and we are 70 to 80% below that. With that kind of inventory shortage price declines are out of the question until that changes dramatically

Submitted by Escoguy on February 19, 2022 - 10:40pm.

sdrealtor wrote:
Looking at this all shows how dire the inventory situation is. Last year it was low and we’re almost 40% below that. When you look at the last 10 year trend pre pandemic you see we should be somewhere around 6000 and we are 70 to 80% below that. With that kind of inventory shortage price declines are out of the question until that changes dramatically

My supercomputer mind is trying to come up with a scenario where inventory could rise to even last years levels:

1. A large number of older home owners face a sudden life threatening event AGAIN in the next few years. I believe those with "paid off" homes above 60 with locked in taxes thank prop 13 are least likely to move. So rate this probability as low.

2. A large number of remote workers from the Bay Area or LA decide it is better to return to a higher cost area with worse traffic and higher costs. It would need to be a corporate mandate. Also see this as low.

3. A large number of working class manufacturing employees/other blue collar fields leave San Diego for lower cost hubs. Mid level risk here. Many have already left (personal experience knew in 2014 welders leaving Lakeside for Texas).
Remaining are making deliberate choice to stay but wages aren't keeping up. How long will people double up/downsize etc.

Probably highest longer term risk. I.e wage inflation for lower end services/retail/food starts to catch up with rent inflation. That is is more systematic and that will put pressure on rents and prices as people leave who can't afford not just housing but the overall lifestyle.

So in a nutshell, inventory will probably grow fastest in the least desirable areas.
This will force disproportionate price increases in the higher end areas.

My wife would say "And you think you have discovered America?"

Submitted by sdrealtor on February 20, 2022 - 8:22am.

I think your looking at the answer from the wrong direction. It’s tough to see any dramatic change on the supply side coming first so it has to come from demand. The answer is rising interest rates cooling demand allowing inventory to build. Then as it builds and prices slow or even turn more sellers will appear looking to get out on top. Higher interest rates is the only solution

Of course that will only keep those of us with 2.5% fixed mortgages in place even longer but we need to slow demand first

Submitted by Escoguy on February 20, 2022 - 11:52am.

sdrealtor wrote:
I think your looking at the answer from the wrong direction. It’s tough to see any dramatic change on the supply side coming first so it has to come from demand. The answer is rising interest rates cooling demand allowing inventory to build. Then as it builds and prices slow or even turn more sellers will appear looking to get out on top. Higher interest rates is the only solution

Of course that will only keep those of us with 2.5% fixed mortgages in place even longer but we need to slow demand first

On the demand side, the main factor may be if fewer people choose to come and live here.

As companies like Illumina/Qualcomm/Bio-tech/health care continue to grow, their workforces will also grow. May be at a slower rate but 0.66% population growth per year (2010-2020 average per US census) is not an unreasonable expectation, that works out 1.132 million households and an annual increase in households of about 7,500 per year.

Number of housing units increased by 5.5% over the decade so even with roughly 1.233M housing units, the supply gap is estimated at upwards of 7K units per year.

I don't see a huge shift in either side of the equation.
I think it may just be slow shifts.

Some estimates show a gap of 140,000 units which if the current rate of construction doubled, would take up to 20 years to close.

Submitted by sdrealtor on February 20, 2022 - 12:38pm.

I just dont see fewer people coming here. The horse is out of the barn. Between WFH and the early/on time retirees those folks are coming. The growth of UCSD and all the companies that are and increasingly will get incubated out of there is gonna keep em coming and drive wages higher. Its gotta be interest rates. I just dont see any other way

FWIW I had a conversation a couple weeks ago with friends I have wine dinners with every friday night. They came here from Bay Area a couple years ago and he was a long time HR exec at some of the biggest names. I asked him what a housing market looks like when everything is sky high expensive like it is up there. The short answer is people squeeze into smaller spaces, commutes grow, wages rise as do the costs of services we relie on. He said get ready for $75 haircuts

Submitted by Escoguy on February 20, 2022 - 1:54pm.

sdrealtor wrote:
I just dont see fewer people coming here. The horse is out of the barn. Between WFH and the early/on time retirees those folks are coming. The growth of UCSD and all the companies that are and increasingly will get incubated out of there is gonna keep em coming and drive wages higher. Its gotta be interest rates. I just dont see any other way

FWIW I had a conversation a couple weeks ago with friends I have wine dinners with every friday night. They came here from Bay Area a couple years ago and he was a long time HR exec at some of the biggest names. I asked him what a housing market looks like when everything is sky high expensive like it is up there. The short answer is people squeeze into smaller spaces, commutes grow, wages rise as do the costs of services we relie on. He said get ready for $75 haircuts

We may be touching on variations of the same broader theme.
Few will actually leave, many will still come.
Supply will be hard to catch up.
Prices will likely go higher still.
People at the lower end will charge more for their services and at times double up/etc.
Almost feels like that time just before a short squeeze when there are no sellers to offset oncoming demand.
I pay$20 for a haircut now (kind of a lower end place which used to charge $10) pre Covid. Her prices won't go back down either. At $30, I may buy clippers.

Submitted by sdrealtor on February 20, 2022 - 8:51pm.

Agreed to all

Submitted by andymajumder on February 22, 2022 - 12:03pm.

One big difference compared to a few years back is the number of high paid tech jobs in SD. QC is no longer the only game in town, there are about 2000+ openings among Apple, Amazon, Google & Facebook with SD as possible location, these are highly paid tech jobs, not retail or fulfillment jobs. There are many other smaller companies on autonomous vehicles, AI, embedded HW which are mushrooming in San Diego. SD is a tech hub now, in fact it was among top 4 in the nation for VC funding last year. That, combined with a complete lack of inventory almost ensures SD real estate will be quite expensive and unaffordable compared to national standards.

Submitted by sdrealtor on February 22, 2022 - 2:13pm.

andymajumder wrote:
One big difference compared to a few years back is the number of high paid tech jobs in SD. QC is no longer the only game in town, there are about 2000+ openings among Apple, Amazon, Google & Facebook with SD as possible location, these are highly paid tech jobs, not retail or fulfillment jobs. There are many other smaller companies on autonomous vehicles, AI, embedded HW which are mushrooming in San Diego. SD is a tech hub now, in fact it was among top 4 in the nation for VC funding last year. That, combined with a complete lack of inventory almost ensures SD real estate will be quite expensive and unaffordable compared to national standards.

Welcome back and hope all is well for you. Yup we’ve been saying that around here for a while. Real estate Is going crazy all over the country but something more than that seems to be going on here. Happy to be a homeowner

Submitted by gzz on February 23, 2022 - 4:36pm.

Great to go up so much, but we're right in line with the sunbelt average. Case-Shiller Dec 20 to Dec 21 gains:

Phoenix 32.5%
Tampa 29.4%
Miami 27.3%
Dallas 26.0%
San Diego 25.9%
Las Vegas 25.5%
Seattle 23.9%

US Average 18.8%

Calculated Risk has been tracking select market inventories. San Diego's inventory decline of 48% YoY is one of the steepest. But the average is 32%, so it is a nationwide trend.

Factors people have mentioned that are San Diego specific I agree with, but I think will come into play when the national market cools off, but we keep rising.

Submitted by carlsbadworker on February 25, 2022 - 5:16am.

Given that the mortgage rate has gone above 4%, what’s the resulting payment-based valuation now?

Submitted by Rich Toscano on February 25, 2022 - 11:22am.

Good question! I will try to update those charts this weekend.

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