~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…

A Brief History of the Last Housing Bust

Submitted by Rich Toscano on April 3, 2006 - 9:45am

One of the forum participants, a long-time San Diego appraiser, has posted a really good summary of how things played out during the last down cycle in the local real estate market. I think it's very instructive for those of us who weren't punched in to the housing scene back then—so much so that it deserves to be its own post. Without further ado, quoting "Bugs":

I think all cycles play out a little differently. But I also think that past predicts the future.

(category: )

Downtown and Underwater

Submitted by Rich Toscano on April 2, 2006 - 9:32pm

The Union-Tribune is running a story about the slowing Downtown condo market. They actually cite several examples of people losing money! Here's one example...

Carol Cavanaugh, a lawyer who works downtown, bought a condo in The Grande south tower for $623,000 in late 2004. She thought she would like the convenience of being close to the office, but she doesn't like high-rise living. She put the unit on the market for $570,000 to $599,000.

She has received two low-ball offers, both from real estate brokers. But Cavanaugh is going to stick it out until she gets what she wants – even if it is a loss.

(category: )

Mortgage Guidelines Moving Forward

Submitted by Rich Toscano on March 29, 2006 - 6:03pm

You may recall that at the end of 2005, the OCC and friends released a proposed set of rather stringent lending guidelines. (See Is This the End of E-Z Credit? for a summary). The publication in question did not put guidelines into place, but rather explained the guidelines being discussed and requested comments from the banking community.

The draft rules didn't seem to scare anyone straight. Some lenders tightened up, but that seemed as much a symptom of credit conditions as anything. Meanwhile, in a desperate bid for more market share, some lenders have gotten even more risky since the document's original publication.

(category: )

Credit Market Report: March 2006

Submitted by Rich Toscano on March 26, 2006 - 9:24pm

This article will address recent mortgage rate movements along with important policy developments by the world's central banks. Executive summary: the credit market sure seems hell-bent on preventing a meaningful spring rally.

(category: )

Surprises in Store for ARM Holders

Submitted by Rich Toscano on March 21, 2006 - 9:07pm

Check out the graph at the bottom of this Real Estate Journal article on adjustable rate mortgages. It ends up that many borrowers (nationwide, but if anything I imagine that SoCal is worse) aren't even aware of key facts about their ARMs, such as the cap on individual or overall rate increases, how rate resets are calculated, and more. Pretty amazing.

I imagine that many of these folks never bothered to learn the facts about their resets because they figured they'd sell or refi (for huge profit, or course) before the resets ever took place. Given flat home prices and rising rates, however, that no longer seems like such a great plan.

(category: )

Bubble Money in OC

Submitted by Rich Toscano on March 20, 2006 - 10:33am

In the OC Register, Jonathan Lansner connects the dots about housing and Orange County's economy. In discussing a burgeoning slowdown in OC (corroborated by slowing profits by businesses and increased skipped payments by consumers), Lansner notes:

In the past year, $100 billion was lent against Orange County property - a sum equal to the gross domestic product of nations such as Iraq or New Zealand.

Local lending's totality is up 2 percent in a year. That ample flow of money, if nothing else, may be allowing troubled property owners in this town to put off harsh decisions.

Yes, exactly. The press is slowly but surely coming around to the idea that the housing bubble's enormous (but temporary!) stimulative effect on the economy is an issue of great import.

(category: )

Mortgage Reset Mania

Submitted by Rich Toscano on March 15, 2006 - 7:03pm

This week is kind of a mess, so I'm going to have to make do with a "drive-by posting," in which I simply point to someone else's content.

Today's someone-else is Barry Ritholtz of The Big Picture, a financial blog of which I am quite fond. And the content is his recent post on the impending wave of mortgage resets in 2006 and 2007: $2 trillion dollars worth of mortgages, to be exact, or about 1/4 of all mortgages.

Many borrowers in this category still have plenty of equity.
(category: )

Good Luck With That

Submitted by Rich Toscano on March 13, 2006 - 11:07pm

The LA Times is running an article on the wave of condo/hotels, which appear to be bubble's latest foray into absurdity. Why buy an overpriced condo, when you could buy an overpriced condo that you only get to live in for one month per year?

As an aside, lest you start to think that San Diego is overcome by doom and gloom, I give you a potential buyer at the Hard Rock Hotel:

(category: )

Drink the Poole-Aid

Submitted by Rich Toscano on March 11, 2006 - 7:26pm

A speech on housing by the Fed's William Poole made the rounds this week. I thought I'd link to it because it clearly illustrates a point that I think is crucial to always keep in mind: that the folks at the Federal Reserve are politicians first and economists second.

Let's jump right in with this line from his speech:

(category: )

Condo Hell Freezes Over

Submitted by Rich Toscano on March 8, 2006 - 10:14am

Folks in the UTC area (fondly called "Condo Hell" by inhabitants--I know because I used to be one) may be interested in today's Voice of San Diego piece on the University City housing market. This area has apparently sat out the latter part of the boom, with prices pretty stagnant since late 2003. The zip code winners/losers list I recently put together shows the UTC area as having a 3% median price increase over the past year... positive, at least, but not enough to cover the cost of selling.

(category: )

Housing Market Report: February 2006

Submitted by Rich Toscano on March 3, 2006 - 9:36pm

This article will examine trends in San Diego home price levels, breadth, sales volume, and inventory in order to determine where the undercurrents are taking the market. Additionally we will take a look at a warning light that has started to flash for the local economy.

(category: )

When Mortgage Brokers Attack

Submitted by Rich Toscano on March 1, 2006 - 5:30pm

A reader forwarded me a hilarious Craigslist posting. This is from, of all places, the "casual encounters" section:

If you are interested in having some fun with a cute (5'4" 110 lbs, size 3), and openminded girl...

Hmmm... sounds pretty good so far. But read on...

(category: )

Disappearing Demand

Submitted by Rich Toscano on February 28, 2006 - 11:50pm

Will Carless at the Voice of San Diego writes about January's steep home sale decline. While the January year-over-year decline was particularly dramatic, the trend towards shrinking sale volume has been firmly entrenched for months. And, complete lack of concern on the part of the interviewees notwithstanding, long-term trends in declining San Diego sales volume have usually lead to declining home prices in the past.

I will examine the latest housing market data in great detail in the next Monthly Housing Report, which I hope to release tomorrow.

(category: )

Big Housing Players Turning Bearish

Submitted by Rich Toscano on February 27, 2006 - 10:13am

Thanks to a reader who pointed me at a Business Week article called Jitters on the Homefront (warning: this is BW subscriber access only). The article interviews famed housing bear Robert Shiller along with Countrywide CEO Angelo Mozilo and KB Homes CEO Bruce Karatz. Shiller's thoughts are no surprise, but I was pretty shocked by the bearishness of the two CEOs, especially Mozilo. Here is a brief excerpt; emphasis is mine:

(category: )

A New Low for the Bullish Propaganda Mill

Submitted by Rich Toscano on February 24, 2006 - 7:20pm

A reader sent the following article in last weekend. This has been mocked elsewhere, but I couldn't resist taking my own shots, as this is without doubt the most inept attempt at real estate cheerleading that I've seen to date:


Sir John Templeton was known as the “Dean of Investing”, and he was a classic contrarian. Mr. Templeton said to buy when things looked most pessimistic and sell when the masses felt most optimistic – and his attitude paid off. He began his Wall Street career in 1937, created many of the world’s largest and most successful international investment funds, and is now a full time philanthropist at age 92.

(category: )