San Diego Housing Market News and Analysis
That's More Like It
Submitted by Rich Toscano on July 13, 2006 - 9:37pm
Since I mentioned yesterday that I was surprised at the sanguine tone of the UT article on the median price drop, I must in fairness mention that (as suspected) they came out with an expanded and more gloomily-titled piece today.
While I'm here, I can't help but comment on a couple of sections from the article. This:
...is simply outrageous. The "normal cycle of decline" is pictured here:
When adjusted for wage growth, San Diego housing has given back all of its boom-time gains in both of the prior downturns. Wages are now rising at around 5% per annum. So assuming (as this gentleman apparently does) that this "cycle of decline" will follow prior patterns, the decline has a very long way to go, either in terms of duration, price, or some combination thereof. I am just astonished that, of all the possible rationales for buying now, someone would actually try to invoke prior downturns.
Second, I note that the article points out the following:
The fact that single family home medians peaked last month may well become the new life raft with which the permabulls try to keep their theories afloat. I imagine that resale single family residences will suddenly become the only property type that is meaningful.
However, the Case-Shiller home price index, which tracks actual paired sales and thus reflects pricing power better than the median price, shows that so far resale single family home prices have yet to regain their November peak. So while they will no doubt try to find a way to drink this data pretty, there is really no question that prices are on the decline.
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