May 2009 Resale Data Rodeo

Submitted by Rich Toscano on June 8, 2009 - 6:45pm

As I wrote a few days back at, we may just be experiencing a geniune spring fling:

In the month of May, the size-adjusted median price for single family homes rose 3.3% for detached homes and 2.9% for condos. This makes for the second consecutive month featuring an increase in this price indicator.

The plain-vanilla median featured some of its trademark wacky volatility, rising 3.0% for single family homes and -- are you ready for this? -- 10.7% for condos!

The Case-Shiller proxy, based on the detached home size-adjusted median, enjoyed its first rise since 2007. It remains to be seen if the actual Case-Shiller index will rise for May, but Pigg esmith (who calculates such things based on actual same-home sale prices, as opposed to guessing based on the size-adjusted median like I do) has projected a May increase over at his website.

As I wrote in the prior article, I suspect that this is a legitimate price increase as opposed to a 2007-style head fake based on the fact that supply and demand are so much more favorable right now. (That's current supply and demand -- shadow inventory etc. may be a long term issue without necessarily affecting the current level of for-sale inventory). Inventory just keeps marching down, as seen in this next chart:

Inventory is about 2/3 of what it was this time last year. And this doesn't address the fact that so there are a substantial number of short sale properties sitting out there with offers on them that have been counted as active inventory, but aren't really actually available in the traditional sense. The MLS has a new category for properties with offers on them, so can look into that more next month. Even without considering that, inventory is quite low.

Sales, meanwhile, were once again better than last year, though the gap is narrowing:

As you might expect, the months' worth of inventory was quite low:

The disparity between inventory of condos and detached homes keeps growing, with their months of inventory at 6 months and 4 months respectively. This is a pretty huge difference considering how well they've tracked in the past. Perhaps a greater proportion of condos falls into that new status category -- we will see.

As always, the above graphs lump the whole county together and while they are of interest by themselves, we always need to keep in mind the big disparities between different areas of San Diego. For instance, I just put this table up -- it shows a continuance of the trend wherein the more expensive areas have fallen less in price but are stagnating volume-wise, while the cheaper areas have had bigger price declines but are enjoying a huge surge in activity.

I ended the afore-linked Voice article with about as good a summary of my view on the market as I'm going to come up with, so I will just wrap up by repeating it here:

...until the more-accurate but lagging Case-Shiller index can settle the question, I am going to wager that we are seeing a legitimate rise in home prices. But that doesn't mean the bear market is over. As I pointed out last month, spring-to-summer price rallies are common even in multi-year housing busts.

That said, there are certainly some positive, if disclaimer-laden, factors in support of housing. They are: reasonable home prices (though only in certain areas); extremely low mortgage rates (though artificially so, and at risk to rise enormously in the years ahead); healthy demand (though heavily dependent on continued low rates); low inventory (not counting foreclosed "shadow" inventory); and unfathomable amounts of government stimulus aimed directly at propping up home prices (okay, I admit that's not likely to stop any time soon).

But given the huge overhang of current and potential future foreclosures that will likely need to be sold into the market, not to mention all the parenthetical disclaimers in the paragraph above, it's going to take more than a two-month spring rally to convince me that the bottom is in.

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Submitted by 4plexowner on June 9, 2009 - 5:34am.

I'm confused Rich - I thought we had reached the conclusion that median prices were pretty much useless yet your last two posts have used median prices

"as opposed to guessing based on the size-adjusted median"

I guess that's part of the answer?

Submitted by FormerSanDiegan on June 9, 2009 - 8:20am.

In the Bubble primer, Rich also used median prices to make the assessment that homes were overpriced.
In retrospect they seem to have been pretty useful for that.
We all know that the median is flawed since it is sensitive to changes in market mix.
But that does not mean that these are not useful indicators.

Submitted by Rich Toscano on June 9, 2009 - 8:37am.

The median price per square foot isn't useless or else I wouldn't update it every month. It's got its flaws but it can provide useful information as long as its flaws are taken into consideration.


Submitted by 4plexowner on June 9, 2009 - 9:21am.

we talk about median prices and their shortcomings often enough that perhaps an 'Explanation of median prices and their use' link on the home page is worthwhile - I looked for such an animal this morning and didn't find one

as always, Rich, the info you provide on this site is invaluable and I appreciate it

thanks for this latest medley of charts

Submitted by Rich Toscano on June 9, 2009 - 9:34am.

Thanks 4plex, that is a good idea. I did write a pretty involved piece on that topic so i will put it up in the primer. For now, the link is here:


Submitted by wonderwoman1970 on June 10, 2009 - 8:49am.


I am going to sit back and continue to read this website often and take your advice over our financial planner. Much props to you and your website. We moved to S. Cali three years ago. We have been reading your website, took your advice, and decided to wait and buy. You have saved us hundreds of thousands of dollars (now we have a nice nest egg as we kept our money in the bank after we sold at the peak in FL) and thanks to you...we are not in the same mess that most are in. Words cannot express my gratitude of thanks.

Submitted by Rich Toscano on June 10, 2009 - 10:49am.

Thanks for the kind words, WW...


Submitted by surfer00 on June 11, 2009 - 1:46pm.


I had commented a while back that Im a REO broker in L.A. county and I spoke of the moratoriums that had held back inventory.

The last month or so we have been doing BPO's night and day to keep up with the banks' demand. Bpos are 'broker price opinions' the banks use (usually along with a full blown appraisal) to see what they have is worth. It's the first step when they have taken back properties. Then we go out and see if the property is oocupied.

Anywho, I was asked to report back when things changed on my end. Well, things have changed and reo's are being dumped on the market as I type. We are swamped and I will complain about it until it's over, but I have been working toward this time for a couple of years now.

If they dont pull another moratorium trick or something else, the inventory should explode in the coming days/weeks.

Submitted by Rich Toscano on June 12, 2009 - 8:16am.

Thanks surfer00... very interesting. Given the statewide nature of the moratoria it makes sense that to suppose the same thing is going on here... Any local San Diegans able to corroborate this?


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