San Diego home price hits all-time high of $525K

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Submitted by biggoldbear on May 23, 2017 - 12:51pm

http://www.sandiegouniontribune.com/busi...

San Diego median home price hits all-time high of $525K
Not as informative as Rich's numbers, but more followed by the masses. Looks like sales volume might be dropping faster than normal with the increasing prices. Will be an interesting year to follow the data.

Edit: Of course this is not inflation adjusted (addressed in the article). There was a lot of talk on how long it would take to get back to new nominal highs (https://piggington.com/when_do_you_think...)
Nominal prices came back much faster than most people expected, with relatively low inflation. Nearly there on the more accurate $/sf.
Nominal prices are still important for those who bought near the peak and decided to ride it out.

Submitted by bewildering on May 23, 2017 - 2:05pm.

No, it is not an all-time high.

$525,000 in 2017 dollars = $420,000 in 2005 dollars.

The author of this article would presumably be astounded that houses in La Jolla only cost $30,000 in 1955. Because anyone could afford $30,000.

Submitted by Rich Toscano on May 23, 2017 - 3:21pm.

bewildering wrote:
No, it is not an all-time high.

$525,000 in 2017 dollars = $420,000 in 2005 dollars.

The author of this article would presumably be astounded that houses in La Jolla only cost $30,000 in 1955. Because anyone could afford $30,000.

Nah the author gets it -- he addressed the inflation thing within the article. That said I agree that the headline could do a better job of distinguishing real vs. nominal prices. But it's tough to do that without getting jargony. (FWIW, I doubt the author picked the headline).

Anyway, this will lead to a new round of "is this a bubble"... time to update the valuation stuff I guess!

This is probably the most relevant stat: SD home prices would have to rise 40%, with no accompanying increase in rents or income, to reach bubble peak levels. Still quite a ways off from there! But, definitely getting spendy...

Submitted by spdrun on May 23, 2017 - 3:43pm.

Is the 40% figure you cite adjusted for rents, mortgage rates, or inflation?

If you're only talking about inflation, $525,000 was the peak bubble valuation ca. 2005, and inflation was 25% since then ($525k/420k), wouldn't the true peak be about 25% higher?

Submitted by Rich Toscano on May 23, 2017 - 3:47pm.

Sorry, I was referring to the relationship to incomes/rents, per my usual charts... if comparing to inflation, it's as you say.

Submitted by flyer on May 23, 2017 - 6:26pm.

bewildering wrote:
No, it is not an all-time high.

$525,000 in 2017 dollars = $420,000 in 2005 dollars.

The author of this article would presumably be astounded that houses in La Jolla only cost $30,000 in 1955. Because anyone could afford $30,000.

So true. When our family, beginning with our parents, started buying RE in San Diego in the 70's, many bought in LJ, Sunset Cliffs, and other areas for less than $100K. At that time, I don't think anyone would have imagined how things would explode to our present day levels.

Submitted by harvey on May 23, 2017 - 8:31pm.

Rich Toscano wrote:
Nah the author gets it -- he addressed the inflation thing within the article.

Yeah, I read the article and thought the author addressed the effect of inflation pretty well.

bewildering wrote:
$525,000 in 2017 dollars = $420,000 in 2005 dollars.

When I first saw that number I questioned whether it was correct. Google must have led me to the exact same inflation calculator. I don't know exactly what data it's using, but that seems about right. But it still gave me pause - even with modest inflation there's been about a 25% increase in general prices since the bubble. It's been a long time!

Submitted by kev374 on May 24, 2017 - 10:55pm.

It can hit new highs... I think everyone who isn't in real estate has stopped giving a flying fuck anymore. Most are tired of these ridiculous bubbles that are going to eventually crash and in the interim people pretending that these are real valuations and economists releasing press articles swearing why this time it is "different" LMAO!

Submitted by harvey on May 25, 2017 - 5:58am.

Much of this new high point is simply due to inflation, so of course it can hit new highs.

Today you are the youngest you'll ever be and the oldest you've ever been.

Submitted by biggoldbear on May 25, 2017 - 7:39am.

Edit: Of course this is not inflation adjusted (addressed in the article). There was a lot of talk on how long it would take to get back to new nominal highs (https://piggington.com/when_do_you_think...)
Nominal prices came back much faster than most people expected, with relatively low inflation. Nearly there on the more accurate $/sf.
Nominal prices are still important for those who bought near the peak and decided to ride it out.

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