San Diego Housing Market News and Analysis
March -- April 2015 Housing Data Rodeo
Submitted by Rich Toscano on May 20, 2015 - 4:46pm
The market's been pretty hot, by which I mean, demand seems to be outstripping supply. I base this statement on the below chart, which shows that while months of inventory is higher than it was during the spring 2013 feeding frenzy, it is lower than this time last year:
...and, it's among the lowest we've seen recently outside said feeding frenzy:
I've been discussing the plunge in months of inventory for a while, and surmising that this would put upward pressure on prices, as there is typically an inverse correlation between months of inventory and monthly price changes:
And sure enough, prices have jumped in recent months, after going nowhere for the better part of a year:
Months of inventory remains low, so I'd expect this to continue for as long as this remains the case. However, I think there is a good chance that the recent surge in rates (which are still quite low on an absolute level, but higher than earlier this year) will somewhat reduce demand and thus upward price pressure, to at least some degree. Still, all in all, price pressure appears to be to the upside.
To be clear, this says nothing about what is a sustainable or reasonable level of home prices for the long term. I am just talking about near-term supply and demand pressures, which have been and still seem to be conducive to rising prices. (As for the sustainable/reasonable level of prices, this is best determined by comparing home prices to the underlying fundamentals... I'll be updating that stuff soon, but it hasn't changed dramatically since the last go-around).
More graphs below, for the bored among you.
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