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Posted by on Dec 27, 2012 in Forecasts, Same-House Sales | 12 comments | Print Print

San Diego Case-Shiller Forecast

The non-seasonally-adjusted Case-Shiller Index for San Diego rose again in October:

Oct. 2011:  152.86

Sep. 2012; 160.09

Oct. 2012: 162.10

It was the ninth monthly increase in a row, and the year-over-year improvement of +6% is the biggest we’ve seen lately.

Those thinking of selling in  early-2013 have to be licking their chops.  But wait until they see the next Case-Shiller reading, which will be released on January 29th, the week of the Super Bowl. 

The Case-Shiller Index is a three-month weighed average, and we already know that September and October’s readings were well above those from 2012.  But November’s stats blew away the field – Dataquick reported that the San Diego Y-O-Y average $/sf rose 10.6% in November.

The CSI does purge some of the most vital data (flippers turning in less than six months, etc.) but with our November sales and pricing both substantially improved over the previous month, the next Case-Shiller reading should provide great banter for Super Bowl parties throughout the county.

As a result, expect that grossly-overpriced listings will be hitting the market in February.  If the current buyer discipline stays on track,  we will experience a sparse beginning to the selling season. See the graphs in the right-hand column. >>>> 

Realtors will be falling back on the only closing line they have ever known, “buy now or be priced out forever” and some uneducated buyers could get sucked in and pay too much if they only read the soundbites.

Can we count on our leaders to direct us? Here is a quote from the UT, in response to San Diego having the second-highest gain the country:

“Phoenix went through a real difficult time where their values really, really went down, but it’s certainly been rebounding” said Donna Sanfilippo, president of the San Diego Association of Realtors. “San Diego, being a steadier market, placing No. 2 in rebounding shows that we’re leading our area after what has been a couple of rough years.”

…we’re leading our area?? 

Expect more of the same from NAR and CAR too – vague innuendos that won’t say it directly, but imply that everything is fine, go ahead and buy.  But based on the graphs, it doesn’t look like buyers are going for it, so the early-spring sales are likely to be very disappointing.

12 Comments

  1. I watch the Redfin 92130 graph pretty carefully. I hear these 10% figures and wonder – WTF ?

    Looking at Sold $/SqFt I see that year-over-year we went from $316 at the end of 2011 to $326 last week – an increase of 3.1%.

    I also see we went from $334 at the end of 2010 to $326 now – a decrease of 2.4%

    So, as people get excited over “the housing recovery” I’m still seeing that it has not recovered, even by 2010 standards – let alone 2005 standards.

    The San Diego graph looks much stronger, but while it is up 10% year-over-year, it is only up 3.7% in the last two years.

    Seems to me that 2012 was just making up for 2011 and not much more. In the face of truly awful inventory, I would have expected more.

    By the way, I was away from the blogs over Xmas and just saw your piece on the inventory flow. Was very well done and insightful (especially for an RE agent :)

  2. Buyer’s question …
    What will happen in the short term (1 to 3 years), if the inventory continues at such low levels?
    I am currently renting in Coastal Carlsbad and want to buy in the next year or so. I know couple of folks in the neighbourhood who want to sell (and are not in stress), but are holding off till the prices come back to peak prices of bubble. Beyond the pricing, their simplistic argument is … “(if the inventory shortage continues like this, then ) …after selling our house, we can not buy anything decent/better in this market anyway, and would be priced out eventually, even if the prices continue to climb at a moderate rate (3%)”.

  3. Welcome Programmer – II, we love analytical types here!

    Around Carlsbad and the rest of NSDCC, I think we are back to grouping sellers into the Big Three: death, divorce, or job transfer, with an occasional foreclosure and/or strategic default.

    Unless a seller has that sort of pressure on them, they have to leave town to make it worth selling. Not many people want to do that.

    You would think that renting would be much cheaper, but it isn’t. If the tax breaks change substantially it might make a difference, but with a decent house in Carlsbad renting for at least $3,500 per month there aren’t many sellers who are going to take that option unless something is really out of whack.

    You can subscribe to Daniel’s consistent message of negativity – both of his articles today are the same theoretical stuff we have heard for years:

    http://www.doctorhousingbubble.com/echo-housing-bubble-echo-real-estate-bubble-united-states-home-prices-incomes/

    If you are ticked off that the government is subsidizing the housing market, and have let banks rule the roost, then complaining on the sidelines is an entertaining option.

    In the meantime, the rest of us are trying to make the best of it. The previous post about ProfHoff was a great example, though I only covered a tidbit.

    People who look for a house for four years are very analytical and deliberate. In this case, we considered all the variables carefully, and Water’s End was a great match for them.

    We had two shots at buying fraudulent short sales in the $600,000s, but dropped both because of inferior locations and substantial work needed to bring them up to speed.

    In the end, we concurred that in the next 1-3 years there is likely to be appreciation happening for the select few who buy right. Flippers are making six-figures everywhere, and people like ProfHoff will likely enjoy their home while letting the crucial timing aspect do its thing.

    But you gotta be in the game – and get quality help. I cover Carlsbad, if you want me to assist you, call or email anytime.

  4. Also on Pinto’s bashing of FHA.

    Everybody who complains about FHA somehow ties in that their mission is to help the low-to-moderate folks buy a house.

    If FHA changed their mission, would it change your mind?

    Because FHA, Fannie, and Freddie all changed their mission to an all-out, do whatever-it-takes-to-save-housing-and-the-banks a long time ago.

    The gov priced in the defaults into the new, higher FHA insurance, being paid by every FHA-loan holder for the duration of the mortgage.

    The FedGov hopes that it is about right, so taxpayers won’t have to pony up too much more to save FHA. But NONE of them care if you are able to make your payment – they care about saving the banks.

    Now that we are clear about that – Pinto mentioned private mortgage insurance, so let’s explore where we are heading.

    Private mortgage insurance allows for their entire premium to be paid up front – a VERY smart way to pad the wallet. Their fee is 3%, and the seller can pay it in full at closing. Here we go again – a big fee up front paid by a third party on behalf of the buyer – where have we heard this before? The NACA down payments?

    There is always going to be easier money made available under the guise of helping the poor and moderate. But we have learned that it is just another part of the housing support system that benefits the players on the inside.

  5. I’d certainly expect sales to slow down before we see any weakness in prices. That’s the way it’s always happened before. The seller pool is pretty easy to gauge. They are right there in the MLS. The buyer pool is a lot more difficult.

    A bidding war on a hot property means buyers are out there and we’re probably working off the pent up demand from the bubble years. We’re probably also working on a pent up demand to sell and it’s likely that by the time the sellers finally decide it’s the right time to sell the buyer pool will dry up.

    At this point the only unknown I see is what happens with the FHA default properties. We know the default numbers are high but if FHA defaulter we’re being foreclosed on it would be coming through the HUD channel and there’s nothing there right now. I’m sure government bailout of FHA will show up sooner or later and I’m sure there will be some crisis to cover for it.

  6. I just believe all the intervention is not helping the overall economy. With no jobs, this is a structural problem. I have participated over the last year or so and took great pleasure in knowing the banks that held the notes on the property I purchased lost over 700K, but they were dumb enough to lend the money. Now if I can only get my county to allow for the Proposition 60 transfer, but I’m have to jump through four levels of government wast to get the OK.

  7. Overall economy? No jobs?

    We’ve found the answer. You’re on the wrong blog.

  8. I get a lot of information from this blog and I respect your opinion and outlook. San Diego is a major component of the California economy and if it is selling, it can signal good times.

  9. Thanks, I’m glad to hear it.

    I’m OK that you are in a different county and me having no hope of ever earning a commission with you.

    But do you have to drop a doo-doo on so many of my posts?

    I don’t mind discussing all the angles, but you seem to lay a negative link in every comment, whether it is applicable to the subject or not.

    Can you break it up a little?

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