San Diego Housing Market News and Analysis
May 2021 housing data - we may have achieved peak frenzy
Submitted by Rich Toscano on June 13, 2021 - 2:14pm
Note: I did some housekeeping on the graphs, getting rid of many that I thought didn't add that much value. For example, condo data was volatile without adding much info (so I mostly focus on single family homes now), and contingent inventory hasn't been a factor for many years. Also, for the long-term price graphs I wanted a log scale graph, and user spdrun told me a trick for getting those to look good (thank you spdrun!). However, the downside is that the Y axis units on the log scale graph are pretty meaningless. So, for both the long term price graphs (pr/sq foot and Case Shiller), I include both a linear and log scale version.
OK, onto the data. Looking at these graphs, my feeling is that the frenzy has probably peaked. It's still a frenzy! But months of inventory has finally stopped declining and even rose a bit. (Edit: to be clear, I am not suggesting that prices have peaked, just that the imbalance between supply and demand may have started to diminish).
Zooming out, supply and demand might be moving back towards balance, but it has a long way to go:
As for prices, based on the single family price/square foot they appear to have held at last month's level, but there is noise in these monthly figures, as is clear from last month's dramatic increase. The Case-Shiller estimate rose as it is based on the past 3 months of price/sq ft. (Remember: there are 2 versions of each graph, the linear one to get a sense of the units, and the logarithmic one to better represent the magnitude of changes over time).
Here's months of inventory vs. price changes, which have correlated strongly in the past:
While inventory (inverted on the chart) is still quite low, it's also the case that prices overshot the gains we should have expected given current inventory levels. So there could be some price pullback for that reason. Aside from that, this level of inventory is suggests continued price increases, if it remains this low. (The sustainability of this situation is a whole other topic, and a difficult one, which is not addressed here).
That's it on the comments; few more graphs below...
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