Outstanding housing market analysis at National City bank

User Forum Topic
Submitted by asragov on May 4, 2007 - 8:30am

National City bank has an interesting map showing over / under valuations of housing markets around the country.

The methodology is also very interesting (Household Population Density, Conventional Mortgage Rate, Relative Income Level, and Constant income to price ratios), and worth reading. Scroll down under the map to see the report and methodology.

The median price in San Diego is shown as being 29.6% too high in Q4 of 2006 (scroll down to see the updated data sets for 4Q 2006 to download the Excel file, and then look in the tab in the Excel file called "valuation"). Naples, FL is shown at 79.9% overvaluation (!) and College Station-Bryan, TX is shown at 22% undervalued.

Another "scientific" confirmation of how overpriced San Diego real estate is in particular, and how local real estate is in general.


Submitted by no_such_reality on May 4, 2007 - 9:03am.

So looking at 1985 to 2006, basically, ten years of up bubble pricing and 5 years of down pricing, and calling that "normal" they still conclude that prices are over-valued.

Submitted by sddreaming on May 4, 2007 - 10:13am.

This is an interesting read. Thanks for posting it asragov.

San Diego is overvalued by 29.6%, yet the report ranks it as being "moderately overvalued". San Francisco is overvalued by 29.7%, but it is considered "overvalued".

San Diego has a coef. value of only 0.512 and a t-Stat of 4.6. That surprises me a little. Maybe this is related to factors like relatively lower incomes and high traffic volumes? Don't know. San Jose has a coeff of 2.196 and a t-stat of 31.9. Personally, I think San Diego is much more liveable than San Jose.

Tongue in cheek comment related to powayseller thread: On second thought, this report reeks of data and statistical analysis. The author should have included real life subjective data points, like realtor interviews, to make it more factual.

Submitted by 23109VC on May 4, 2007 - 10:23am.

I pulled up Riverside. It shows overvaluatation of almost 70%.....

here is a question about that however - Riverside/San Bernardino as a whole have POCKETS of nice stuff, and PILES Of crap. you have entire zip codes of scumville in these two counties.. then you have nice little spots like Temecula...that are basically outcroppings of the SD market and OC market... 90% of it is upscale, cleancut, etc.

You can't compare Temecula and say... Perris...or Colton...or Romoland... that would be like comparing Scripps Ranch to some gang infested nasty part of San diego...

so when these "over value" estimates are made..I wonder how it will pan out when you talk about nice areas vs junk.

i can see prices crumbling in Perris. no one wants to live there. I see places like temecula and scripps ranch.. and think.. ok prices may fall... but bottom line is that there WILL be people with money who want to live in these places.... so while prices may fall... i dont' necessarily see Scripps or nice parts of Temecula falling as much as the slums... so these "over value" numbers ar emisleading in that they clump the whole county together and you can't do that.

prices in La Jolla aren't goign to drop or change exactly the same as prices in Scripps, or Mira Mesa....or Carmel Valley... you may see overall trends... but do you think prices will fall the SAME across the board in all areas iwthi n a county.. i don't think so.

i'm not saying stuff won't fall. in my nice little area of Temecula... houses are sitting for sale and not moving... there are piles of houss on the maket.

why would my landlord hav eoffered me his house at almost a 100,000 LOSS unless he felt he coldn't do any better?

Submitted by asragov on May 4, 2007 - 11:30am.


Your question is probably related to the whole "median price" discussion. The median price can obscure movements in all areas of the market.

Remember Keynes' saying, that "Markets can remain illogical for longer than you can remain solvent."

Submitted by gn on May 4, 2007 - 11:52am.

"then you have nice little spots like Temecula...that are basically outcroppings of the SD market and OC market... 90% of it is upscale, cleancut, etc."

The problem with Temecula is it's infested with speculations/fraud. While the houses in Temecula may look nice on the outside, it is the financings of the houses that are crummy. In the next few years, foreclosures will mushroom in Temecula.

I suspect that the main reason Temecula looks good now b/c most of it is relatively new. Overtime, new houses will become old. This is why, in real estate, it's all about the location. And Temecula is "location challenged".

Temecula is an "outcropping" of SD & OC. Riverside is also an "outcropping" of OC & LA. Riverside used to be new & looked good too.

Submitted by SHILOH on May 4, 2007 - 2:46pm.

Corpus Christi TX is undervalued.

Submitted by PerryChase on May 4, 2007 - 2:54pm.

Neighborhood prices don't happen in a vacuum. They move up and down in relation to what's else is out there. Everything is interrelated.

Submitted by Sandi Egan on September 14, 2007 - 10:45am.

2007 Q2 report shows San Diego prices overvalued by only 18%.

Submitted by PadreBrian on September 14, 2007 - 12:46pm.

They are creaping down. 4th quarter should be down to 10% overvalued.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.