July Price and Sales Data

Submitted by Rich Toscano on August 10, 2006 - 10:18pm

After getting hammered last month, the median prices for both SFRs and condos were up... the latter slightly, the former somewhat dramatically:

I'm not sure whether the "official" number (the DataQuick median) will be negative again, but I suspect it will, as the dismal performance of new homes combined with that of resale condos will likely be enough to overpower the meager strength in SFRs.

We here at the Econo-Almanac know that the median is not a very good measure of actual pricing power—however, it's what the rest of the world focuses on, so it behooves us to look at it. In an attempt to get a somewhat better measure of actual prices, I've started to track median price per square foot. This still has many of the problems of the median, but at least we can abstract out the effects of people buying bigger places for less money. I only have this data going back to May. Unlike the raw median, it shows a steady deterioration of pricing power since then:

The bulls will take heart in that jump in the SFR median price, but the above graph indicates that they probably shouldn't.

Sales volume was abyssmal, falling almost 15% and 17% for SFRs and condos respectively... from the prior month.

I expect to see sales fall off a cliff like that in January, not in July. If it's not a one-month fluke, the steep decline in volume could indicate rapidly changing sentiment as more people decide it's not a good time to buy. That would be bad.

Based on last month's sales and current listings, I've got SFR inventory at 6.8 months and condo inventory at 8.2 months.

I expect those numbers to get a lot worse. Defaults in the second quarter were up 90% from the prior year and 21% from the prior quarter. But the default party is only just getting started, as most of the really precarious suicide loans won't start to reset until next year. Inventory will rise, but it won't be any inventory... it will be must-sell inventory. That's when prices really start to take a beating, because must-sellers are forced to accept whatever price they can get.

But we're here to talk about July. And while the bulls may try to spin it otherwise, it was an ugly month.

Update: The DataQuick numbers are out and actually more negative than my own. This is in contrast to last month, when the DQ figures were higher than mine. Different data sources are used (my numbers were taken straight from the MLS, whereas I DQ uses the county recorder), so there will inevitably be some conflicts like this, although this month's was more dramatic than usual. In addition, as sdrealtor is fond of pointing out, none of these data sources is terribly reliable in the first place. The point is to try to ignore the noise and get a good idea of the larger directional trend (which at this point appears to be "down").

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Submitted by an on August 10, 2006 - 11:23pm.

I've been using rereport.com along with dqnews for my monthly data, besides this site. According to rereport.com, they just released the numbers today, both SFR and condos are down y-o-y. Here's the direct link: http://rereport.com/sdc/main_nci.html . I guess there's some discrepancy between the sources, but the sentiment is still the same. For those who don't want to go to the link, it says, SFR is down 0.8% y-o-y and condo is down 9.2% y-o-y and 2.8% m-o-m.

Submitted by powayseller on August 11, 2006 - 9:24am.

Rich, these are the best charts anywhere on the San Diego market. No wonder we are all addicted to Piggington! That price/sq ft chart tells the story so well - while the median is up, the prices actually are dropping. Now, what are the chances of the media reporting $/sq ft instead of median?

Submitted by mrmaps on August 15, 2006 - 10:07am.

anyone know where we can track the cost of construction materials, lumber, copper tubing, etc ? it would be interesting to see if these are starting to fall off as well

Submitted by softweyr on August 17, 2006 - 5:10pm.

Prices in San Diego dropping? Say it ain't so! Unlike most of your readers, I'm going to state that prices here need a good, big drop. I say that because, of course, I'm not in the San Diego market. I live here, and rent, because I can't possibly buy a home for what I can rent one, something that rarely happens out there in there in the real world. Most San Diegans don't realize how the cost of living here vs. the salaries paid screw both the employees in this market and companies who can't attract new talent. Personally, I just can't wait to leave.

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Where am I, and what am I doing in this handbasket?

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