San Diego Housing Market News and Analysis
March 2017 Data Roundup: prices moderate, but inventory collapses to 2013 levels
Submitted by Rich Toscano on April 11, 2017 - 4:29pm
In last month's update, we saw an unusually large one-month jump in the price-per-square-foot metric, with single family homes up 4.5%. This month, prices by that measure pulled back by 1.4%, indicating that some of the increase was month-to-month noise. Still, when you combine the two months, it makes for a robust 3.0% increase in February and March together. By comparison, last year the single family ppsf rose by 1.7% over the same period.
Here's the 3-month average of the single family ppsf in red, which gives a better idea of the underlying trend.
So despite the monthly noise, the price trend is strong -- which is what you'd expect given that active inventory is really low. Like, 2013-level low:
This, by the way, is not the result of a change in demand, which is at pretty normal levels...
...but rather by a scarcity of homes for sale:
The low months-of-inventory in 2013 was similar to now, in that it was driven by a normal-ish level of sales along with very low active inventory. And, 'member what happend then? Prices went bonkers, is what happened, increasing 18% (Case-Shiller) for the calendar year.
Of course, that was off a significantly lower valuation base, but then again, the months-of-inventory figure accounts for the level of demand at whatever the current valuation is, which is probably one reason why the relationship shown below has worked reasonably well across very different valuation climates:
As kind of crazy as it seems, if months of inventory stays this low, a 2013-style price surge is in the realm of possibility. I'm looking forward to seeing what the data tells us in the months ahead.
Further charts below (and if you want a flashback to what a real bubble looks like... enjoy).
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