bubbleinfo.com

Yesterday we saw that list pricing of San Diego houses had jumped recently, and a reader wanted to scale it down to local markets.

You can see in this Carmel Valley graph that last year the list pricing never picked up any momentum during the prime spring selling season – the average list-price-per-sf was in a downward trend for the first three quarters of the year.  But there has been a surge over the last four months, though still well under all of 2010.

Also note that the buyers have stayed under control the last two years - the average sales price stuck right around Carmel Valley’s magical $330/sf , until recently:

Sales during the prime spring/summer selling season weren’t as successful either, staying well below those in 2010.  They tapered off early too – the late-summer plunge in sales looked like totals from winter months, even though inventory had been on the rise through June/July. 

But it appears that there must have been a lot of market-testers, because the inventory dropped steadily in the second half. 

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Here are the same two graphs for SE Carlsbad’s 92009 zip code, which is about the same size as Carmel Valley. 

This graph shows how committed buyers were to staying in the tight $240/sf-to-$250/sf range last year, as they watched sellers go nuts with their list-pricing during the spring kick.

Buyers were very patient, just picking off the good buys; and as the inventory of seller/dreamers thinned out heading into the holidays, so did sales:

What will it be this year? 

Buyers have waited this long, they aren’t going to pay a lot more than the last guy – maybe a little.  If so, they’d still be in line with 2010 pricing on these two graphs.

List and sold average cost-per-sf for San Diego houses, from ‘fin:

The weather has been nice and all, but we haven’t seen an explosion of seller enthusiasm like this since the boom years, and maybe never.  The fantasy-to-reality gap over the last two years has been around 20-30 points, but now it’s over 50!

Could it just be a return to 2010 list pricing?  It might be, and if buyers continue to hold out for better quality, then the average-per-sf of solds could conceivably go up too.  

It is likely that we’ll be seeing a more volatility, and/or a standoff.

Are houses selling in the new year?  How hot is the start?

There isn’t any way to track the sales that fell out of escrow last year, we just have closed sales to count. But let’s compare last year’s closed sales to this year’s pendings, and figure that 10-25% will fall out:

NSDCC detached listings that were marked ‘Pending’ between Jan 1-22:

If 25% of this year’s pendings fall out of escrow (142 – 25% = 106), we are right on track with last year – and it appears that each price range is fairly represented too, though there is a downward tilt, depending on which ones fall out. The under-$700,000 category is bulging!

No contingents were counted either (there are 148 contingents, but you have to count them individually – maybe I can get an assist on that today?), so I think we’re off to a good start.

This year’s list prices are averaging $379/sf, and last year’s solds closed at $358/sf.

The existing-home sales stats for 2011 are out today; here are Diana’s comments from cnbc:

Home sales rose in December to the highest pace in nearly a year. The gain coincides with other signs that show the troubled housing market improved at the end of last year.  Still, sales remain depressed and ended 2011 well below healthy levels.

The National Association of Realtors said Friday that sales increased 5 percent last month to a seasonally adjusted annual rate of 4.61 million, the best level since January 2011 and the third straight monthly increase.

For the year, sales totaled only 4.26 million. While that’s up from 4.19 million the previous year, it’s below the 6 million that economists equate with healthy housing markets.

Sales are increasing at a time when the market is flashing other positive signs. Mortgage rates are at record-low levels. Homebuilders have grown slightly less pessimistic because more people are saying they might be open to buying a home this year. And home construction picked up in the final quarter of last year.

The median sales price rose 2.3 percent to $164,500 in December.

The glut of unsold homes declined to 2.38 million homes. At last month’s sales pace, it would take a nearly 7 months to clear those homes. Analysts say a healthy supply can be cleared in about six months.

Once last year she mentioned that we should keep our focus on local market activity – let’s do that!

Detached-Home Sales and Pricing:

For the comparison by zip code, click here.
http://www.bubbleinfo.com/2012/01/03/north-san-diego-sales-2011/

We’ve seen the detached sales/price statistics be fairly flat around here the last couple of years.

If anything, the year-over-year stats in most most zips are down slightly, but check a couple of interesting hot spots – Del Mar and Rancho Santa Fe.

There will be some late-reporters, but as of today, this sums up the 2011 sales and pricing:

Updated 1/20/12

Happy New Year!

Will 2012 get off to a fast start? It is somewhat predictable, let’s consider some data.

The quarterly detached sales in NSDCC:

The first half sales have been stronger the last two years, but it’s probably due more to the improvement we’ve had since March 2009 in both housing and the stock market.

Will we have 500 sales in the first quarter of 2012?

Let’s review the categories to estimate:

1. The MLS shows that are 275 listings in the pending category, and 187 of those were marked pending on December 13th or prior, so they are beyond their 17-day contingency period and pretty likely to close. Let’s say 170 will close in 1Q12. Of the other 88, let’s say half will close, or 44.

2. There are 119 listings marked contingent, but they tend to be flaky, and drawn out. Let’s say only 50 of those will close in 1Q12.

3. There are currently 1,100 active listings – how many will close in 1Q12? They are a picked-over bunch, so they will have to be lowering their price aggressively to get back in the game – but how many sellers will resist, thinking that the spring selling season is just around the corner? Plenty, so let’s say only 10%, or 110, will close in the first quarter.

4. There were 137 listings that closed in 1Q11 that also listed in 1Q11 – they weren’t messing around. Coincidentally, there were 136 like that in 2010, so let’s use 137 for 2012.

170 + 44 + 50 + 110 + 137 = 511 estimated sales in the first quarter of 2012.

I think 511 sales in the first quarter is conservative. With 30-year mortgage rates averaging under 4%, the market is ripe for a quick start – it will take a boatload of stubborness of behalf of sellers for us not to sell more NSDCC houses this quarter, than in recent years.

But that seller stubborness is certainly possible!

As 2011 is wrapping up, here’s how the NSDCC detached sales and average cost-per-sf compares with previous years (I added a zero to the $/sf numbers):

We have seen that the size of the inventory has some sort of impact on the market.  When the market is loaded with over-priced turkeys (OPTs), buyers gain confidence about staying on the fence.  When it grows thin, the buyers get antsy and jump sooner…and some at prices a little higher than they want.

The size of inventory is fluid, and day-to-day.  But for our purposes, we can see an overall effect below by comparing annual sales to total listings taken each year:

By dividing sales by listings, we have the efficiency ratio, and when it’s around 60% the market seems to be somewhat balanced. You can see that in 2001 that we lost about a month’s worth of sales due to 9/11, and that in 2003 the market was in full-tilt-frenzy mode.

Today’s low rates and below-peak pricing, combined with the tight inventories, are helping to improve the efficiency rate.

The average days-on-market hasn’t been this high around NSDCC in a decade, which generally means that the sellers’ motivation is dreadfully low.  The banks aren’t pushing people to short-sell or foreclose unless their delinquency is extremely high, and elective sellers are willing to wait for the lucky sale.

These market conditions do help put a brighter spotlight on the few well-priced listings, and as a result, we have vicious bidding wars and shenanigans to contend with, in the fight to win one.

The thin inventory and lower seller motivation is a tough combination for buyers – get good help! 

The Case-Shiller Index for October, 2011 was published today, and the media is swamped with negativity.  CR prefers the seasonally-adjusted; here are both for San Diego:

There’s the soundbite – “prices” are still going down, according to the Case-Shiller Index.

We’ve picked apart their methodology before - today let’s examine how many sales are excluded in their rolling three-month counts. 

They compare the most recent sales price to the previous sales price of existing single-family homes only (no condos).  They then weight the data based on the time interval, and any extreme price changes.  Typically 85% to 90% of the sales pairs receive no down-weighting. 

But they also exclude sales too.

They state that the excluded ‘non-arms-length’ sales pairs are “usually less than 5%” of the total, and that new-builts and flippers could exclude another 0 to 15% of the total sales too. (See pages 8 and 19 here). 

So let’s say that they think 2% to 20% of the actual sales are left out.  Or is it more?

Standard & Poors/Case-Shiller does publish their counts of sales pairs, but they don’t add up:

Their published counts can’t be just the one-month total, because they are way too high.  If their published number is the 3-month total, then they are excluding more than half of the detached sales, according to the MLS count.

Sure, a survey of half of the sales is worthy. But when the index is only moving 1% to 2% per month, it wouldn’t take many of the excluded sales to drastically influence the outcome in either direction. Yet, that isn’t mentioned anywhere – instead, the media uses the CSI like it is a gold-plated AAA-rated fact about “prices”.

Just like with the NAR data, don’t make decisions solely based on what you think the Case-Shiller index says.  The best gauge is the on-the-ground survey done with your own eyes and ears.

Thanks to Rich Toscano for the excellent work at the voiceofsandiego.org:

The Case-Shiller index of San Diego home prices declined in September.  For the month, the low-priced tier dropped 1.6 percent, the middle tier 1.1 percent, and the high tier .1 percent.  The aggregate index fell by .8 percent.

September is typically a weak month for home prices.  When that negative seasonal influence is backed out, the decline was less severe (in fact, the high tier actually rose).  Still, though, the direction of the market has been pretty steadily downward since the tax credit stimulus ceased to be back in mid-2010:

Returning to the non-seasonally-adjusted numbers, here’s a look at the Case-Shiller index numbers since the bubble-era highs.  Since the peak, aggregate home prices have fallen by 39 percent:

The last graph doesn’t account for the ever-declining purchasing power of the dollar.  This is an important distinction, because inflation helps to mask the magnitude of the actual decline in home values.  The next graph shows Case-Shiller prices since the peak again, but this time they’ve been adjusted for inflation:

Since the peak, “real” (inflation-adjusted) home prices by this measure have fallen by 47 percent.  It’s tough to see on the graph, but this is slightly lower than the previous trough in early 2009.  Real San Diego home prices have just hit a new post-bubble low.

From the Encinitas Patch:

Luxury home values notched modest gains in the region in the quarter ended Sept. 30 compared to the second quarter, but were down nearly 4 percent from a year ago, according to an index released today by First Republic Bank.

Area values increased 1.1 percent from the quarter that ended June 30 and fell 3.9 percent year-over-year.

The average luxury home in San Diego is now worth $1.63 million, according to the First Republic Prestige Home Index.  The properties represent a cross-section of luxury homes in Coronado, Carlsbad, Del Mar, Encinitas, La Jolla, La Mesa, Poway, Rancho Santa Fe, San Diego and Solana Beach.

In the Los Angeles area, values rose 0.7 percent from the second quarter of 2011 and increased 2.5 percent from the third quarter a year ago. The average luxury home in Los Angeles is now worth $2.01 million, according to the index.

Bay Area values climbed 1 percent from the second quarter and declined 1.4 percent from a year ago. The average luxury home in San Francisco is now worth $2.53 million.

“Luxury home prices in many California communities increased due to low inventories, low interest rates and home prices that have declined over the past few years. This has improved the economics of investing in residential real estate,” said Katherine August-deWilde, president and chief operating officer of First Republic Bank.

“All three major metropolitan areas in California experienced gains in home prices in the third quarter, which is the first time that has occurred since the fourth quarter of 2010,” she said.

San Diego prices turned positive again after declining in the first half of 2011, according to the index.

Despite the modest quarterly increase, luxury home prices remain soft, and many buyers remain uncertain. Greg Noonan of Prudential California Realty in La Jolla said the lower end of the luxury market was picking up.

“I’m seeing a bit of pent-up demand in the $1.5 million to $3 million range. At $4 million and above, it is a fairly soft market,” Noonan said. “Buyers are being extremely aggressive in their thinking about price. If a property is on the market for $4 million, buyers want to pay $3.5 million to build in some downside protection.”

The First Republic Prestige Home Index measures changes in homes valued at more than $1 million in key California urban markets. Common features of luxury homes in the index include 3,000 to 6,000 square feet and three to six bedrooms and bathrooms.