Category Archive: ‘Rich Toscano’
Our friend Rich Toscano has his latest San Diego housing analysis here:
In spite of record prices, the inventory has been setting recent lows:
Yet, sales have been mostly better than every year since the Frenzy of 2013!
Fewer homes for sale but more sales?
Are sellers doing better to improve their homes before selling, or are buyers so desperate that they are buying crap they wouldn’t have bought during the last couple of years just purely because of the scarcity?
Full report here:
Let’s examine Rich’s other charts to see how divergent our San Diego market has been lately, comparing to the last three years. In spite of much-higher pricing, the raw number of homes for sale has crossed under the paltry few we had during the Frenzy of 2013, and into uncharted territory:
Yet, the volume of sales has been strong – and see June :
The rest of the year looks OK too, though this is for the whole county:
There will be sellers – especially on the higher-end – who didn’t know how motivated they were until now. Will they lower their price, or wait and take their chances next year? The market couldn’t be much better than now!
The new pendings had a nice bounce back this week, but just making up some ground lost over the last couple of weeks. Last September, we averaged 90 new listings, and 66 new pendings per week:
We don’t mind if the new listings drop off – all we want are motivated sellers, because it is so unlikely that buyers will wildly overpay now. With all the outside distractions, it will be a little too easy for casual sellers to wait until next year.
It looks like potential sellers are already thinking about next year:
Rich has his latest report on the San Diego stats:
In his graph above, you can see that the county has been cooking this summer, with as many pendings as we’ve had in recent years!
In spite of higher pricing, we’ve also had fewer homes to consider. Isn’t it mind-boggling that in a county of more than 3 million people, we’ve had less than 6,000 homes for sale all year?
We’ve been following the weekly new pendings between La Jolla and Carlsbad since 2013, but I haven’t monitored the NSDCC total pendings. Any rise and fall in the total-pendings count would be a precursor to a change in sales count, which would give us a hint of a new trend.
The NSDCC pendings count has been in the 400s over the last few months, so as summer winds up, these numbers aren’t surprising:
NSDCC Total Pendings today: 373
NSDCC Pendings, 20+ Days: 194
The houses that are still pending after 20 days have probably released their contingencies, and are on their way to the finish line. I will keep track of them from now on to see if the trend reveals anything new!
A bubble perspective from our friend Rich Toscano!
With the median San Diego home price recently having exceeded its prior bubble peak, there is some concern that the housing market may be entering bubble territory again. But while San Diego’s housing market is certainly hot, and its home prices a good deal more expensive than usual, it’s hard to make the case that this is a genuine bubble.
A bubble is more than just a market that’s become pricey. Investment bubbles are characterized by extremes in two areas:
• Valuation: Prices become exceptionally high compared with the economic factors that have typically driven pricing in the past. Often, prices and valuations will experience very rapid increases.
• Psychology: Investors are optimistic to the point of euphoria. They are dismissive of risks (and skeptics who raise them), and seem to fear only missing out on further gains.
San Diego housing in the mid-2000s was an absolutely classic bubble. From 2001 through 2005, local home prices increased 63 percent faster than incomes and rents. At their peak, home valuations reached 73 percent above the historic norm; the highest it had gone previously was 12 percent above normal, and that had led to a six-year downturn. By mid-bubble, prices — already totally unhinged from their fundamentals — were growing at a blistering pace, as much as 33 percent in a single year.
As for the sentiment … I was a housing skeptic on these pages, so I could go on at length. Suffice it to say that one reader informed me that by not buying a house, I was dooming myself and all my descendants to be part of a new permanent underclass of non-homeowners. That was one of the nicer comments.
Things look quite a bit different in 2017.
Read full article here:
Glad to see the U-T relying on Rich for an explanation!
The San Diego County median home price hit $525,000 in April, passing the region’s previous peak reached in 2005, real estate tracker CoreLogic reported Tuesday.
High demand and tight supply appear to have pushed the price beyond previous milestones. There were 3,618 homes sold in April — the lowest for that month since 2012.
Supply is dwindling, too. In April, there were 4,763 active home listings in San Diego County, said the Greater San Diego Association of Realtors. That is down from 5,754 listings the same time last year and the 6,386 in 2015.
When adjusted for inflation, the nominal November 2005 peak of $517,500 would be roughly $644,500 in 2016 dollars. Still, the San Diego median price is noteworthy for increasing 7.4 percent in a year and outpacing most of Southern California.
Housing bubble fears are likely with the new median but home prices would have to rise 40 percent (assuming no income or rent growth) to be as overvalued as much as they were during the last peak, said Rich Toscano, who predicted the last housing crash on his blog Professor Piggington’s Econo-Almanac.
“Homes are definitely expensive when you compare purchase prices to rents and incomes,” he said. “They are the most expensive they’ve been outside the bubble. But, it still doesn’t compare to the expensiveness of the bubble.”
Toscano said low interest rates are keeping the monthly mortgage rates somewhat affordable and home valuations high.
“In theory, for as long as low rates persist, they could keep supporting the prices,” he said. “The big question is if that will continue to happen and the smartest people in the world disagree on that.”
There were 2,306 resale homes sold in April, bringing the median home price to $575,000, a new peak surpassing the previous record of $574,000 set in May 2006. The resale condo price was $385,000 with 1,108 sales — still $15,000 away from the peak set in April 2005.
Rich is covering the whole county, which looks similar to the frenzy of 2013!
Read his full report here: