March Housing Data

Submitted by Rich Toscano on April 10, 2007 - 11:04am

In case you haven't put this together from the abysmal lack of new content, I have been fairly pressed for time. So I'm going to present this month's data with a minimum of editorializing.

Prices

The size-adjusted median price, aka the median price per square-foot, was mixed for March. The mpsf (can I use that acronym, please? it will save me a lot of typing...) was down .5% for condos but up 1.4% for detached homes. Both were of course still down on a year-over-year basis...

...and from the September 2005 peak in this series (note the new low for the condo mpsf):

The plain vanilla median was up substantially for both property types:

I think the divergence between the vanilla median and size-adjusted median is likely an effect of the subprime tightening, which has restricted sales of the lower-end properties and thus shifted the sales distribution up towards more expensive homes. As always, I think the size-adjusted median offers the better gauge of actual pricing power.

I have been charting the vanilla median because that's what everyone else looks at, but the new home data (to which I don't have access) exerts such an influence that looking at the resale-only median is nigh useless even as an indicator of what the mainstream folks might be thinking. I'll probably keep charting it just for kicks, but our attention should remain focused on the median price per square foot (which is itself very imperfect but still much better than the vanilla median).

Any housing bears panicking at the increase in the median and/or the single-family mpsf should read this article.

Supply and Demand

As weak as things were last year volume-wise, this year is turning out even weaker. Again, the tightening in the exotic loan sector is probably at work here:

Inventory growth remains muted. In aggregate we are just about flat from this time last year:

However, the weaker sales volume makes for a less favorable months-of-inventory reading than a year ago:

Conclusion

Things should get more interesting as the spring buying and selling season picks up the pace. I expect that must-sell inventory and more potential credit tightening will be the prime movers in the months ahead. Stay tuned.

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Submitted by jg on April 10, 2007 - 12:41pm.

Fine analysis, Rich. Given the consistent move northward in median price since fall '06, I think I'll consider buying, now (not!).

Nah, the fun has just begun.

Submitted by JJsqueeze on April 10, 2007 - 3:00pm.

I am not surprised by a small increase in prices in the short term. I think it is to be expected that there are a certain number of people that have been chasing the market for a while and they feel that they finally gained enough ground to get in. I also think that some activity is going to be driven by people who are selling large, expensive houses and buying more affordable ones. I think that they are fairly strong buyers as they have most likely been patient or they would already be in, or they have made a good profit on thier large house and are wise enough to see that now is the time to get off the gravy train and get into a reasonably priced house at a fixed rate. Their numbers are very limited. Once they are absorbed then I think the tank is dry. This is, of course, pure conjecture. But I am interested to know if anyone else has had the same thoughts.

Submitted by no_such_reality on April 10, 2007 - 3:15pm.

The rise has a simple explanation, the mix of homes is moving to the upside while price for each of the homes is declining. For example, look at Orange County's February Numbers:

All resale houses $670,000 -3.6% 1,567 -12.6%
All condominiums $458,000 -1.5% 714 -20.1%
All new homes $626,500 -3.1% 337 -37.2%
All homes $620,000 -0.8% 2,618 -18.8%

Notes the smallest decline in price was condos at -1.5%, yet the overall all homes price only declined -0.8%. Also note that overall, over half of the units sold where resale SFRs.

San Diego's are similar although not as apparent.

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