The Case-Shiller index for March is out today, and San Diego came in ninth out of the top 20 cities for year-over-year decline:
| Town or Area | Y-O-Y |
| Phoenix | -36.0% |
| Las Vegas | -31.2% |
| San Fran | -30.1% |
| Miami | -28.7% |
| Detroit | -25.7% |
| Minneapolis | -23.3% |
| Tampa | -22/4% |
| Los Angeles | -22.3% |
| San Diego | -22.0% |
But those numbers are for March, and are based on a three-month moving average – is there any break in the trend? Here is the chart of number of detached sales, and average $/sf for Carlsbad-to-Carmel Valley for the period April 15th to May 15th:
| Year | # of Sales | $/sf |
| 2002 | $264 | |
| 2003 | $299 | |
| 2004 | $381 | |
| 2005 | $406 | |
| 2006 | $416 | |
| 2007 | $396 | |
| 2008 | $399 | |
| 2009 | $351 |
The 12% decline in average PPSF since last year was the biggest Y-O-Y negative change on the chart, so it doesn’t look like the Case-Shiller numbers will be letting up anytime soon.
So how useful are those numbers for finding the 4/3 3000 sq foot home w/ a view near good schools for <625K that I want?
My guess is that there is another +/- 10% ppsf drop yet to come before it goes positive again.
Assume a 12% drop and you get $308.80/sf. A 2,500 sf home would be an average price of $772,200. 20% down and the monthly payment roughly fits the median income.
CS is s-l-o-w on the second derivative. It is mathematically difficult for the inflection point we saw at the top of the San Diego curve to occur at all. There’s no “anti-bubble” inputs to reverse the rate of change as we go down. At best we can look for an asymptotic return to low/no/slightly negative appreciation.
In 2014 we will get annoyed by all those people at Jim’s “50th birthday 5th anniversary rocking blowout and disturbing the peace repeat arrest party” who will claim they bought at the absolute bottom in 2009 and 2010 and 2011 and 2012 and 2013.
Jim,
Why did you measure Apr 15- May 15th? If Case Schiller measures a full quarter then shouldn’t the time period you sample be the current quarter to date (i.e. 4/1 – 5/26?)
Rob Dawg- are you calling the “bottom” in 2014?
I’m calling a “bottom” will occur after banks are forced to list all the properties they’re intentionally keeping off the market.
2014? No. As opinionated as I appear, I am not able to call the bottom at this point. We “should” have seen the bottom Q4 ’08 but the government intervened. We could have seen a bottom this summer except the banks are not being honest. We can see a bottom Q2 ’10 if we stop screwing around. We will likely not see a bottom until Q1 ’11 subject to revision if we don’t wise up in the mid term elections. I’m not holding my breath.
Are these numbers real for the non Mexician neighborhoods of North County? So what if Imperial Beach and South County gangland is down 70%, what does this have to do with the price of houses in Carmel Valley? In my world, San Diego real estate is up this year, not down?
I see now, it’s the Democrats fault and a banking cabal that is to blame. Thanks for demystifying the situation.
Once the Republicans are back in power and can fix this mess, and, when housing in one of the best places to live in the world is only 10% of income we should be looking better. Right?
By the way, the bottom was February 2009. Not everywhere perhaps but in general that was our nadir here in San Diego.
Okay, last one today; maybe Rob Dawg meant when the Republicans lose one more Senate seat we can get things fixed. If that’s case I unsarcastically agree.
“I see now, it’s the Democrats fault and a banking cabal that is to blame. Thanks for demystifying the situation.”
1. I don’t think anybody mentioned anything about the Democrats
2. Yes, the banking “cabal” is to blame
Agreed, Rob wasn’t being partisan. It’s us vs.them now (taxpayers vs. Government/bankers)
I’d say the bottom is another 2 or 3 years out (2012).
The rebound is going to be slow, slow slow, given our present culture. We have no savings, we still have gangster financial institutions, and unless policies and attitudes change substantially (arrest people for wire fraud), the home buying/selling industry is OVER.
People like Jim will earn a living as realtors. But all the strippers, pole dancers, bartenders, bank tellers, grandmas, bored housewives and plain old “flippers” are through earning a “living” at selling real estate.
Looks like around $300 sqft next stop.
I wouldn’t want pay anything over 500k for my former 2470 sq ft Aviara/Carlsbad 92011 home I once lived in. Based on the quality of construction(minimal), small lot(7200 sq ft) amount of road noise and close proximity to neighbors (barely detached) it was a fair value at 280k new. As these homes age I see lots of room and many a reason to drop in price even in a decent economy. In todays economy…why not 200-250 per sq ft?
Totally off the subject–Whomever mocked the Padres please come forward! 10 straight baby!!!
no bottom yet
http://finance.yahoo.com/tech-ticker/article/254520/Housing-Not-%22Bottoming%22-Says-Tilson-Another-10-15-Drop-To-Go;_ylt=AgBhVd4OGFjBvqylrX6EJxG7YWsA?tickers=?sec=topStories&pos=9&asset=&ccode=
10 straight and still back like 8 games. Will the real slim shady please stand up!
So how useful are those numbers for finding the 4/3 3000 sq foot home w/ a view near good schools for <625K that I want?
1. It could give you hope that prices are still coming your way.
2. It looks close enough that you’ll see an occasional deal that’ll fit. My best this year that was close to your parameters was 2,871sf with full ocean view in Calaveras Hills in Carlsbad for $660,000.
3. It’ll keep you interested – especially if you read thoughts like Mozart’s that the bottom was Feb. 2009. It was a bottom, the market has been hot ever since. Will it be the bottom? Not if the government has a lot of trouble selling their treasuries this week. Interest rates and # of sales are the best two indicators to watch.
4. It’ll remind you that you’ll need lady luck on your side too.
I predict that the debate about the bottom will last years. Especially with JtR here to pour gasoline on the fire 😉
…and I wish properties in west LA were going for 23% off. You’d think it was still 2005 up here.
gasoline
I look like a librarian compared to Mozart!
Can we just call 2009-2014 “the bottom years” and focus on finding the right house, at the right price? It could take another five years to find it!
Mozart is great to have around. It’s never good to be in a echo chamber… just look at SDCIA as an example.
As long as he doesn’t turn into a board troll like Lance over at Bubble Meter, we’ll be fine.
Chuck
4. It’ll remind you that you’ll need lady luck on your side too.
Yes, Jim, that advice works for the Central Coast too!
A couple weeks ago I picked up Harry S. Dent’s “The Great Depression Ahead” at Costco. Dent is very much into studying demographics and calculating cycles. He is predicting starter homes to bottom around mid 2011, vacation/ retirement homes around mid 2012, and McMansions between 2013-2015.
I am about half way through the book, but I am having trouble following how he calculates his cycles. This probably dates me, but he reminds me a bit of Hari Seldon from Issac Asimov’s Foundation Trilogy, the study of psycohistory.
So Chuck, what makes you think that SDCIA is an echo chamber? I think you get a lot more diversity of views on that site then you tend to get from commentators here.
Jim’s got the right idea — watch interest rates.
We won’t see a bottom until after a very painful interest rate increase comes along, and it *is* coming.
p.s.: I want the same house John wants. 😉
[W]hat makes you think that SDCIA is an echo chamber? I think you get a lot more diversity of views on that site then you tend to get from commentators here.
OMG. You get more diverse views from the regular commentators here individually than you get from SDCIA collectively.
Am I the only one who remembers “Jeff?”
Jeff was a bubblehead who has been history now for about three years. These days you get folks like Bruce Norris and other knowledgable people over at SDCIA. Don’t be so quick to stereotype it. I have gotten a lot of good info there.
What is SDCIA?
Tj and Jim, these are the two homes I should’ve made offers on http://www.sdlookup.com/MLS-090018719-1659_Milan_San_Marcos_Ca_92078 and http://www.sdlookup.com/MLS-090029087-1499_Sandbar_San_Marcos_Ca_92078 They both went pending w/in a week. I must admit I thought sellers would be begging me to take properties off their hands but alas, that is not so. In the meantime, it’s off to the shadows I go…
I enjoy hearing others options about topics like real estate. Believe it or not but I do think real estate can be a decent investment. (When government and banks aren’t manipulating the market)
What I don’t like is blatant cheerleading with no facts or theory to substantiate a stance.
For some reason the realtors often seem to fall into this category. I don’t know how many times I’ve stated my opinion on housing and backed it up with a reasonable explanation of how I came to my conclusion only to hear a realtor say something like “but housing only goes up”.
When I ask why housing only goes up the typical response is “because housing only goes up”. At this point I realize my time is better spent speaking with a rock.
At least Jim seems to understand both sides of the issue. This in my option is what makes bubbleinfo.com such a great site.
What is SDCIA?
“San Diego Creative Investors Assoc”
http://sdcia.websitetoolbox.com/
In it’s heyday, they had more flippers than Mickey D’s.
shadash, very well said, and I agree with all points.
I agree with Shadash as well, I still think a HOME is a great investment if you buy well. I get the whole line of thinking of those who consider housing to be a commodity, but a HOME is something more than that. This business of “home as flippable commodity” is a disease that needs to be stamped out. I’m all for the idea of buying a distressed property, fixing it up and selling it – that improves the neighborhood and raises everyone’s standard of living. What bothers me is when I hear stories about Realtors getting a good property because they had the inside track and then turning around and flipping it as is. Rather than an end user getting a good deal on a livable house, the speculator jumped in and skimmed off the top.
But that the system we have. Take risk and create value. Consider though human nature- if oil traders had been “forgiven” for buying at $120 what would they do? Lick their wound and be smart or try to game again? What if we even bailed out the brokers? Economists are a crack pot group because they can’t see themselves.
Re house vs home, there is an amusing quote (that I can’t find exactly right now) that goes something like this.
A house is a pile of lumber that sits out in the rain and rots. A home is a place you want to raise your family. A realtor is someone who makes you see the former as the latter.
31. John, there will be plenty more in San Elijo Hills as prices trend down. Look for $150.00 per square ft coming in Q4 this year. But be prepared to pay higher interest rates tthough. If you love it for a “Home and not a House”, dive in!
$152 per square
gated neighborhood
newer construction
Yes, its Vista. But quiet East Vista. 4 miles to 78. RBV HS, not too bad…Lots of folks send kids to private schools up here as a choice as housing has come back to earth here first. Roads are less crowded right now. Its weird. I though it was a summer 2008 phenomenon with high gas prices, but the 78 and 5 are less crowded still. The 15, well thats another story!
http://www.sdlookup.com/MLS-090002889-731_Vista_Canyon_Vista_Ca_92084
“Can we just call 2009-2014 “the bottom years”
Jim, do you really think there’s a chance we’ll see the market “bottom” in 2009? I wasn’t expecting it until late next year at the earliest.
“I see now, it’s the Democrats fault and a banking cabal that is to blame…Right?”
Mozart
Actually, yeah. We’ve been through this before. The chief architects and those deserving of the most blame are Barney Frank and Chris Dodd. Do your research and you’ll agree.