~Welcome to the Econo-Almanac~

I started this website in mid-2004 to chronicle San Diego’s spectacular housing bubble.  The purpose of the site remains, as ever, to provide objective and evidence-based analysis of the San Diego housing market. A quick guide to the site follows:

  • New visitors are advised to begin with the Bubble Primer or (if wondering about the site name) the FAQ list.
  • Housing articles I’ve written are found in the main section below.
  • Discussion topics posted by site users are found in the “Active Forum Topics” box to the lower right.
  • This website is an avocation; by day I help people with their investments as a financial advisor*.  Market commentary, an overview of our investment approach, and more can be found on my firm's website.

Thanks for stopping by…

The San Diego Housing Bubble

Submitted by Rich Toscano on February 21, 2007 - 9:47pm

By 2001, San Diego had enjoyed a nice housing boom. Since bottoming out in 1996 after a nasty housing downturn, the price of the typical single family home had risen by 74 percent. As of 2001, adjusted for inflation, San Diego homes were more expensive than they'd ever been (at least since the 1970s, which is as far back as the available data goes).

At this point, one might have expected home price growth to slow down or even flatten out. But the show was only getting started. The typical home, already somewhat richly valued, would go on to nearly double in price in just a few years.

Interestingly, this price explosion occurred at a time when rents were growing fairly modestly. This is somewhat strange because the factors that typically drive home prices, such as incomes, employment, and population growth, also affect rents. Yet after 2001, while prices of already richly-valued homes increased 98 percent and the monthly payments on those homes rose 88 percent, rents only increased 31 percent.

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Mini-Rallies Aren't Meaningful

Submitted by Rich Toscano on February 21, 2007 - 11:02am

In my recent January home price data roundup, I included a graph of home prices during the early-1990s bust to illustrate that bouts of price strength were common even during a protracted downturn. A smart reader pointed out that mini-rallies were more than just common -- they were to be expected as part of the seasonal price cycle.

read more at voiceofsandiego.org

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Motivated Sellers Abound

Submitted by Rich Toscano on February 15, 2007 - 10:34am

I've been doing a lot of yapping about the importance of must-sell inventory (as a catalyst for home price declines) and of mortgage defaults (as an indicator of must-sell inventory). I now offer the inevitable graph, with data kindly provided by local foreclosure guru Ward Hanigan .

read more at voiceofsandiego.org

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Guest Commentary: Ramsey on Foreclosure Impact

Submitted by Rich Toscano on February 14, 2007 - 9:53am

My pal Ramsey is a retired real estate broker and grizzled 1990s housing bust veteran. When he's not dragging me to Chinese restaurants on the Department of Health watchlist, he spends his time thinking about how this particular real estate cycle is going to play out, placing a special emphasis on new age lending practices. A couple weeks back Ramsey sent me an excellent (and very long) treatise on foreclosures, which I reproduce in its entirety below.

Foreclosures, Real Estate Financing, and Their Impact to the Real Estate Market

Starting from 2002, every participant in the broad real estate arena has been trained to ignore financing as an integral part of all real estate transactions.  It is so easy that it seems anyone who wants a loan can get a loan.  No down payment?  No credit?  No problem.

So where do we go from here?  As most of you know, since 1982, my specialty in real estate was foreclosures.  I have never seen a cycle like this before so I have no historical comparison to draw from.  All I can offer is some thoughts and points to ponder over:

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January Housing Data

Submitted by Rich Toscano on February 8, 2007 - 10:27am

There is no question that the San Diego housing market is showing a bit of strength. The real question is: what does it mean? Let's have a look at the stats and discuss...


The size-adjusted median price, aka the price per square foot, increased from the prior month for both detached homes and condos:

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Assorted Things

Submitted by Rich Toscano on February 2, 2007 - 10:16am

Well hello there. I felt compelled to check in because I've been feeling guilty about my recent habit of exclusively linking to my voiceofsandiego.org articles in lieu of writing proper Econo-Almanac-only content. I don't mean to make a habit of it. But I've been occupied with other pursuits, and at times like these I need to meet my Voice obligations first, lest editor Scott Lewis administer one of the savage beatings for which he's so well known. (Incidentally, one of the aforementioned pursuits was setting up a website for the financial advisory firm I joined. The site will include occasional articles on finance and investing, so some Piggingtons may find it of interest).

Alright, I realize that the most inane possible genre of blog post is the one where you apologize for not writing more blog posts, so let's move on. There are a few items worth noting...

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December Jobs

Submitted by Rich Toscano on January 29, 2007 - 4:07pm

The positive job growth to which I alluded in the prior entry just got a little less positive.

Last month, I noted that November losses in the housing boom beneficiary sectors -- construction, retail, and finance/real estate -- were acting as a drag on what would otherwise have been fairly robust overall employment growth. The same pattern presented itself in December even more noticably.

read more at voiceofsandiego.org

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The Job Loss Myth

Submitted by Rich Toscano on January 26, 2007 - 2:37pm

It's commonly maintained that home price declines could only take place in the face of widespread job loss. There is something to this idea, but it is not precisely correct. In truth, it is forced sellers who put downward pressure on home prices.

These are the owners who need to accept whatever price they can get for their homes. Absent forced sellers, home prices will likely hang tough because sellers won't have any good reason to accept lower bids. But when the number of people who have to sell grows too much in comparison to the number of willing buyers, prices start heading down.

It's certainly true that unemployment can increase the ranks of people who need to sell their homes, which in turn leads to price declines. Where the conventional wisdom goes wrong is assuming that unemployment is the only possible cause of forced selling.

read more at voiceofsandiego.org

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Angst in the New Era

Submitted by Rich Toscano on January 24, 2007 - 8:59pm

Anyone wondering who funds all the high-risk home loans about which I write incessantly may find a recent Financial Times piece enlightening. The FT article tells us what's on the minds of correspondents from the enigmatic world of structured finance, that seemingingly endless supplier of funding to (among others) ever more questionable home buyers.

read more at voiceofsandiego.org

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January Mortgage Rate Update

Submitted by Rich Toscano on January 19, 2007 - 5:30pm

Last month, I wrote about the decline in mortgage rates during the latter half of 2006, noting that real estate might have fared worse if not for the tailwind provided by falling rates.

read more at voiceofsandiego.org

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Next Year in Real Estate

Submitted by Rich Toscano on January 16, 2007 - 5:54pm

The new year has opened up with signs of life in the housing market and a chorus of pundits proclaiming that the worst is behind us. Could it be true? Will the residential real estate market fare better in 2007 than it did in 2006?

As I survey the scene, I am left with the distinct impression that it will not. Every indicator of housing market health seems to be in worse shape now that it was a year ago.

read more at voiceofsandiego.org

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December Housing Market Data

Submitted by Rich Toscano on January 9, 2007 - 10:17am


It was another down month as measured by the size-adjusted median price:

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November Jobs

Submitted by Rich Toscano on January 5, 2007 - 4:13pm

November registered another month of positive job growth, but troubles in the construction and real estate sectors are starting to take their toll.

read more at voiceofsandiego.org

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Too Many Condos

Submitted by Rich Toscano on January 3, 2007 - 10:57am

While we were out, the San Diego Daily Transcript ran a story (subscription required) pointing out that over 3,000 condo units are currently under construction downtown. Additionally, another 7,000 downtown units are either approved or proposed.

How many of those latter 7,000 will actually be built is open to question. But friends in the industry tell me that once a building is under construction, the odds are high that it will be finished, which implies that most of those 3,000 units in progress actually will be built to completion.

read more at voiceofsandiego.org

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Fight the Power

Submitted by Rich Toscano on January 2, 2007 - 10:40am

It's time to rise up against your oppressors and make your voice heard!

Ok, on second thought, that sounds pretty hard.

Instead, why don't you make your voice heard by casting a vote in the first annual Real Estate Blogging Awards, for which the Econo-Almanac has been nominated in the "Brain Power" category. (Thanks to user bub for posting this in the forums.)

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