Tuesday, March 31st, 2009 at 3:58 PM
Case-Shillerama
The Case-Shiller index for January is out.
San Diego’s index was 148.25, the same as in August/September 2002.
The peak was 250.34 in November, 2005.
As a result, you’ll hear that San Diego prices are down 41% – the difference between the index in November 2005 and January 2009.
But that is a broad stroke by a very wide brush, plus doesn’t January seem like a long time ago?
Are Carlsbad Detached Homes Back to 2002 Pricing?
There were seven houses sold this month that previously sold in 2002 and 2003. All but one closed for double-digit gains compared to what they paid.
The one that sold for less was the guy on Pelican who refi-cashed-out about $600,000 before getting foreclosed, and the bank giving it away for $975,000.
So I wouldn’t say that Carlsbad is back to 2002 pricing.
Will there be a big improvement in the Case-Shiller index between January and March? Doubtful, if anything it’ll probably get worse.
Where is Carlsbad compared to peak-pricing?
2003 – 4 sales, at 7% average gain
2004 – 2 sales, at 12% average loss
2005 – 5 sales, at 19% average loss
2006 – 6 sales, at 23% average loss
2007 – 2 sales, at 22% average loss
There were only three that lost more than 30%:
1. A junker on Pine in the barrio (-37%)
2. A house with 3,057sf but no view in Bay Collection (-32%)
3. A very suspicious sale on Valley where the former owner paid $1.2 million (-52%)
Generally I think you can say Carlsbad is 20% to 25% below peak pricing.
In March there were 15 of 40 houses that sold for a loss, but that means that most sold for MORE than they paid, which should be noted somewhere in the media coverage too.
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The N.Y. Times is on the case, and their quotes include the words ‘gruesome, and ‘no daylight’.
They even quoted a part-time local blogger today:
http://www.nytimes.com/2009/04/01/business/economy/01econ.html?ref=business
Posted on Tuesday, March 31st, 2009 at 3:58 PM in Afternoon Data | 31 Comments » | 
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CR just had a post called Tiered House Price Indices that talks about this very issue: high-end houses haven’t taken as much of a hit as low-end houses.
He cites data from San Francisco, but the same trend is going on in all the bubble areas.
greenlander | March 31st, 2009 at 4:17 pmInteresting. The 2 most recent closed sales in 92067 were at 2002 pricing.
6108 Rancho Diegueno 3.425m (3.50m Nov 02)
7199 Rancho La Cima Dr 3.80m (3.850 Jan 03)
Guess the people who spend $3m+ on a house do their homework.
FuturesWatcher | March 31st, 2009 at 4:32 pmprominent!
Nice going Jim.
Downturn | March 31st, 2009 at 4:35 pmGlad some people have the big bucks to buy overpriced homes.I am shopping for 50k homes.
I am shopping at dollar tree trying to save money.Sucks to be frugal.
arizonadude | March 31st, 2009 at 4:37 pmJim,
From last thread:
This time? July 2004 to now is almost five years.
July 2004 was not the peak.
According to this post it was 11/05; according to CAR it was 5/06; either way it puts a bottom off to 2011 given 5 years.
tj and the bear | March 31st, 2009 at 5:02 pmJim,
Shiller has actually accounted for places like Carlsbad which seem to be holding value while SD as a whole is down 30%. What he’s said is the locations closest to where people work or the most desirable for whatever reason will lose value at a much lower rate. His explination was that buyers that were at one time only able to purchase in less desirable areas are all suddenly competing to purchase in the most desirable areas because of lower prices. And this makes sense when you hear about bidding wars on certain houses even when prices are dropping.
shadash | March 31st, 2009 at 5:06 pmMeredith Whitney noted months ago that home ownership was back to 2002 levels and dropping, so she fully expected 2002 or earlier pricing.
The “high end” of the market is simply proving stickier than the low end due to the better ability of the existing owners to hold out, but that won’t last; never does. Buyers determine prices, not sellers.
tj and the bear | March 31st, 2009 at 5:10 pmProminent! Big time, Jim! Congratulations.
BAM | March 31st, 2009 at 5:25 pmJust downloaded the CS spreadsheet from CR’s site and backtracked to the 90′s.
San Diego registered a top of 86.02 in July 1990 — you nailed the high point, Jim. However, the bottom came in at 71.22 in March 1996, nearly 6 years later, and really didn’t start climbing again until 1997. [NOTE: Those numbers seem SOOOO small compared to the 2005 peak of 250.34 and the current 148.25. Long ways yet to fall.]
So, SD housing prices should bottom no earlier than 2012… and (surprise) I’m not happy about that at all. I’d prefer a quick drop to sane values so I can put Jim to work on finding my place!!!
Sigh.
tj and the bear | March 31st, 2009 at 6:39 pmWhen even the banks walk away from the homes they foreclosed on, can we call this the bottom?
http://globaleconomicanalysis.blogspot.com/2009/03/banks-walk-away-on-foreclosures.html
“…..Banks are quietly declining to take possession of properties at the end of the foreclosure process, most often because the cost of the ordeal — from legal fees to maintenance — exceeds the diminishing value of the real estate….
no bubble here | March 31st, 2009 at 6:50 pm….Property abandonment is getting so bad in Flint that some in government are talking about an extreme measure that was once unthinkable — shutting down portions of the city, officially abandoning them and cutting off police and fire service…
….Our throw-away society has effectively reached a new level of efficiency: the throw-away city.”
Grats Jim, nice reference for you.
Dwip | March 31st, 2009 at 7:08 pmDavid has updated the NYT story, as of 7pm Tuesday. He added a story about lgs, and in it referred to me as:
“Jim Klinge, a prominent San Diego agent”
Wow, David – Thanks!
Jim the Realtor | March 31st, 2009 at 7:17 pmI was reminded of the first quote by David in the NYT, back in January, 2008:
Jim Klinge, an agent in San Diego, said he began the week thinking he knew what the bottom would look like. “People are going to be so freaked out, they won’t buy no matter what the price is.”
Right after the rate cut he got a call from a so-called “bubble sitter” — a man who sold his house at the peak and started renting, convinced that he could sit out the downturn and buy again at the bottom.
“The cut gave him a nice feeling, but it wasn’t enough to get him to buy, or even get in his car to go look,” Mr. Klinge said.
By Friday, however, Mr. Klinge had shifted his position. He appreciated how the Fed cut and the proposed changes in loan limits were attempts to improve sentiment.
Jim the Realtor | March 31st, 2009 at 7:24 pmOooohh! Quoted in the Gray Lady. And a nice upgrade from “an agent” to “prominent” agent. Very nice!
shoppingaround | March 31st, 2009 at 7:35 pmJim,
I know your territory is North County but you’ve posted on properties all the way down to Chula Vista. What are the typical things that would cause you to stretch your self-imposed boundaries?
tj and the bear | March 31st, 2009 at 7:36 pmHere is a quick update on a couple of other indicators related to the CS index:
1) Radar Logic daily PPSF for San Diego County
-7 day average is higher than the 30 day average (indicates prices increasing)
-Historical data also available on the site
2) CME/CS Futures
-Future contract prices have been steady (stopped declining)
-Expected bottom at about 135 index rate in 2010
-Shows potential pickup in 2012
3) Value investor / Hedge Fund manager Whitney Tilson’s take on housing
FuturesWatcher | March 31st, 2009 at 8:23 pm-large presentation with all details of the macro mortgage market
Same post with links:
1) Radar Logic daily PPSF for San Diego County
-7 day average is higher than the 30 day average (indicates prices increasing)
http://www.radarlogic.com/daily%20price%20chart/DailyPublication.html
-Historical data also available on the site
2) CME/CS Futures
-Future contract prices have been steady (stopped declining)
-Expected bottom at about 135 index rate in 2010
-Shows potential pickup in 2012
http://housingrdc.cme.com/
3) Value investor / Hedge Fund manager Whitney Tilson’s take on housing
FuturesWatcher | March 31st, 2009 at 8:24 pm-large presentation with all details of the macro mortgage market
http://www.valueinvestingcongress.com/downloads/ny08/t2_partners/T2_Partners_presentation_on_the_mortgage_crisis-3-30-09.pdf
Kinda OT, but Ridgegate in La Jolla is now getting killed, finally. Look out below.
Genius | March 31st, 2009 at 8:30 pmJ I M
Stephen Waits | March 31st, 2009 at 8:43 pmK L I N G E
F T W !
A couple local real estate reviews for you:
CRE bloodbath in Solana Beach and Game Theory in Leucadia.
W.C. Varones | March 31st, 2009 at 9:04 pmWhat’s FTW? F the world?
W.C. Varones | March 31st, 2009 at 9:47 pmFTW = For The Win
greenlander | March 31st, 2009 at 9:51 pmprominent? next up, “Jim Klinge, a San Diego Super-Agent.” Competing realtors might as well turn off the lights and go home at this point. Now, if we could only get banks to return your phone calls on some of the REOs we bid on.
lgs | March 31st, 2009 at 10:18 pmIt will be hard to top the title of “Super Janae”
greenlander | March 31st, 2009 at 10:54 pmDunno… “Top Notch Entry Man” did have a certain panache, too.
tj and the bear | March 31st, 2009 at 11:28 pmWC,
You are obviously very public about your thoughts on CRE. Do you have any suggestions to take advantage of this situation?
I am short SLG, for example, and sell naked calls against them regularly. I am looking for other easy CRE targets.
There is still is no easy way to play the single family home market (long or short) despite the CS futures market which is too illiquid and has large spreads.
FuturesWatcher | April 1st, 2009 at 7:32 amI feel honored to be posting on a “prominent” realtor’s blog… They didn’t mention your entry man capabilities.
On Case-Shiller generally, its a helpful tool generally, but a pretty lousy one specifically. First, there’s the disparity between high end and low end. Depending on what theory you use, high end didn’t bubble as much, so it won’t collapse as much, or its just lagging the rest of the market and its just a matter of time before a million dollar thud hits.
Second, and more critically, its by urban areas. Urban areas don’t react uniformally. Take the DC market for instance. The outer, new burbs have gotten crushed. The gas spike decreased the desire to move that far out of town, the loss of jobs in heavy immigrant communities hurt a ton, and they’re still building, so resales are tough. (Sounds a lot like outer Chula Vista/ Eastlake/ Temecula/ Murrieta to me…) These areas in DC are down 40-60 percent from peak. Ouch. Comapre that to close in burbs, which are often older homes, and more expensive. These are down, depedning on the area, between zero and ten percent, twenty at the most in less desirable areas. If you march in expecting 30 percent off peak, you’ll get laughed out of the room. I don’t know downtown/close in San Diego as well as the burbs, but I suspect that North Park, PB, etc. aren’t as dire as the areas we look at here. Maybe they are. And if so, that further’s my concern that C-S can be a lot of BS when one tries to apply it to a specific zip code.
Former RB Resident | April 1st, 2009 at 7:33 amCongratulations Jim..you are in the NYT! Hopefully you’ve bought up a few of the print copies. Well done..
A fan | April 1st, 2009 at 8:40 amWow:
Quoted in the New York Times, that’s major dude and something you can rightly tell your grandkiddies someday! Congrats & well deserved recognition.
Wassup | April 1st, 2009 at 9:28 amFutures Watcher,
The REITs are probably still good fundamental shorts but it’s a crowded trade and there aren’t that many more points to zero.
You could short a lot of the regional banks — they are the ones that are going to end up holding the bag when the REITs bust.
W.C. Varones | April 1st, 2009 at 3:37 pmWassup, if things keep going this way the grandkiddies won’t have heard of the New York Times!
W.C. Varones | April 1st, 2009 at 3:37 pm