San Diego Housing Market News and Analysis

Let's do a quick check-in on San Diego housing valuations:

It was a month of yet more gains for home prices, per the median price per square foot, with condos going particularly nuts.  That latter bit is not very analytically important, as the condo price/sqft can be very volatile.  But it does make for an exciting looking chart:

Prices edged up again last month:

The housing market was pretty firm again in February.  The median price per square foot nudged upward for the month:

The Case-Shiller home price index is not as timely as the monthly median price data, but has a couple advantages over the latter. First, because the CS index is calculated by comparing repeat sales of the same homes, it gives a more accurate read on actual home price changes (more than you ever wanted to know on this topic can be found here). Second, the Case-Shiller data additionally breaks down price changes for low-, mid-, and high-priced homes, which allows us to observe what prices are doing in each of those segments of the housing market.

So, we know that 2013's price surge was most beneficial to lower-priced homes, which were up 22 percent for the year. Mid-priced homes were up 19 percent and the most expensive tier was up "only" 16 percent. The overall index was up 18 percent for the year. (Note: the price tiers are calculated simply by separating the home sales into thirds: the high-priced tier is comprised of the most expensive one-third of homes sold during the measurement period, and so on.)

This is the same pattern we've seen since the 2009 home price trough: from their respective lows through the end of 2013, the cheapest one-third of homes were up 51 percent, versus 30 percent for the middle tier, 23 percent for the expensive one, and 34 percent for the overall index. (Some historical context for those changes is found below). Most of that price increase -- and in the case of the middle and high tiers, all of it -- has taken place since 2012.

This graph of the different tiers since the 2009 price low shows that the relative strength of the cheaper homes continued right through to the end of the year:


(continue reading at voiceofsandiego.org)

So much for that price pullback. The median price per square foot for single family homes rose in January, just hitting a new post-crash high:

I must admit, I considered dispensing with the "Shambling Towards Affordability" title for these valuation updates, but in the end I decided that tradition must be maintained.  Anyway, other than the fact that the housing market is neither "shambling" nor moving "towards affordability," it's a perfect fit.

One thing I did change was to combine my two previous valuation indicators, home-prices-to-incomes and home-prices-to-rents, into a single metric.  I thought this would make it simpler to get a single big-picture view on home valuations, and it makes the chart maintenance a little easier on me as well.  The indicator is constructed simply by dividing the Case-Shiller San Diego home price index by an equally weighted average of San Diego rents and per capita incomes, and normalizing the whole deal so that January 2000 equals a value of 100 (just like the CS index). 

OK, enough background... let's have a look:

Hey everyone, I will be chatting with Jim Klinge on some sort of Google Hangout thing, as described here:

http://www.bubbleinfo.com/2014/01/29/sel...

Pop over to Jim's blog on Monday at 8PM to watch.

And btw, I PROMISE I will get the valuation charts updated this weekend, so perhaps that will be a topic of discussion.