San Diego Housing Market News and Analysis
July Resale Data Rodeo
Submitted by Rich Toscano on August 9, 2008 - 9:54am
The size-adjusted median dropped once again in July -- at least overall.
It was down a fairly painful 3.6% for single family homes, which is the worst drop since early in the year. However, it actually rose 2.4% for condos. This would be more impressive if not for the two month beatdown condos had just experienced... even after the July increase, the condo size-adjusted median was still down 9.4% from where it had been 3 months prior.
The volume-weighted aggregate of the two size-adjusted medians fell by 1.6% for the month and was down 27.3% year-over-year. Prices by this metric are now down 1/3 from the peak.
Nothing much interesting happened in the plain-vanilla median department:
The HPI proxy based on the single-family size-adjusted median predicts a 1.9% decline for July:
From a price standpoint, this has been just about the worst spring rally ever.
Things looked a lot brighter in terms of sales and inventory, however. Sales increased up to their 2006 levels:
And inventory dropped below 2006 levels:
...which together led to further substantial improvement in the months-of-inventory figure.
If there weren't such a huge overhang of current and future foreclosures, the improving supply and demand balance would be a pretty compelling sign of a potential market bottom. But then there's this chart, which shows new defaults and foreclosures piling up each month at a record-setting pace.
While the ratio of sales per notice of default has turned up with the recent volume surge, it remains far below the level that prevailed for the entirety of the early 1990s bear market in housing (note that neither the next graph or the prior graph denotes July's activity):
And looking forward, assorted mortgage reset charts and the local realtor's study I recently wrote about indicate that the rate of new defaults isn't going to decline any time soon.
So while the improving demand is a positive, it's not enough of a positive to overwhelm the big negative that is the steady stream of new foreclosures.
One other issue to consider is the general economy. I wrote last month of the preliminary signs that San Diego employment weakness is starting to occur outside of just the housing bubble related industries. If this proves to be a trend, it would both reduce potential demand and further increase foreclosure incidence.
All in all, despite the occasional candle in the darkness, this sure doesn't look to me like the oft-declared "housing market bottom."
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