The Case-Shiller Index for March was released today – quotes from David Blitzer:
This month’s report is marked by the confirmation of a double-dip in home prices across much of the nation,” David Blitzer, chairman of the index committee at S&P Indices, said in a statement. “Home prices continue on their downward spiral with no relief in sight.”
While the overall numbers in the S&P/Case-Shiller Home Price Indices for March are down and disappointing, the pattern is not uniform. A few cities — Washington DC and two in California — San Francisco and San Diego — remain above their recent lows. At the other end of the scale, Detroit is about 30% below its level of January, 2000.
“What we’ve seen over the last few months despite the decline in prices is we’ve gone back to the old ‘location, location, location’ story instead of everything going down at once,” Blitzer said. “California has clearly broken out of the pattern it was in, which is a big plus.”
Though there had been hopes in the industry that prices were troughing and ready to turn higher, the latest trends show little hope in sight until later this year or early in 2012, he added.
“Everybody’s now keeping their fingers crossed for 2012 and wondering whether people just don’t want to own homes anymore,” he said.
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The official month-over-month reading for San Diego is -0.8 (March/February), which is better than the previous -1.3 (February/January).
Here are the peak-to-trough-to-now numbers:
Peak: 250.34
Trough: 144.43 in April 2009 (-42.4% from peak)
Latest: 153.88 in March 2011 (-38.5% from peak)
How accurately does the Case-Shiller Index reflect reality? They don’t count any repeat sales within six months, so flippers are excluded for the most part, and they weight the rest. Here’s a summary of the index here, which notes how it can direct consumer mood and behavior.
But the C-S Index does make for great sound bites, which apparently is all we have time to digest.
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For those interested in the North SD County Coastal region, here is the comparison of May SFR sales:
| Month | # of Sales | Avg $/sf | Median SP | Average SP |
| May 2010 | $800,000 | $1,020,496 | ||
| May 2011 | $882,000 | $1,177,004 |
We still have today’s sales to add, plus the usual 10% for late-reporters, so we should be close to last May’s number of sales too.
I don’t want to sound too sunshine and upbeat, but I do sense that San Diego is coming back faster than other cities. The Navy just announced a huge contract for ship repair and new builds, and Qualcom is on a roll, etc. I see some long vacant storefronts being filled, and as I mentioned in an earlier post, downtown condos are selling much better this year. Bosa Development even announced the groundbreaking of a new 35 story downtown condo in 2012.
I hate to say location location, but millions of people around the world still love to live near the ocean, and there is only so much land. We have friends who fled SD during the crisis in 2008 to North Las Vegas, and now they regret it, as prices in their development fell 50% since then. . . while their old waterfront condo has lost maybe 15% at most. I visited them, and drove through miles of open desert (with for sale signs) to get to their place. Where do we have miles of open building space in San Diego??
It certainly looks like the lack of a tax credit is effecting the lower end markets and likely bringing the San Diego market numbers down somewhat. For example zip code 92126 has these numbers for April the past 3 years.
March 2009 48 sales average price $294K/$233/SF
April 2009 39 sales average price $329K/$243/SF
April 2010 49 sales average price $340K/$242/SF
April 2011 48 sales average price $290K/$227/SF
Those numbers are a combination of SFH and Condos so it could be effected by mix somewhat, but it does show that we’re below the 2009 bottom in that particular lower-middle market.
NCC continues to be a strong market and haves continue to do well in today’s uneven economic recovery.
DC holding its own and even moving up a little. We are immune!
I wouldn’t go so far as to call San Diego “coming back”; it’s more like it has been staying the same for the last two years while the most of the rest the country has been experiencing the “double dip”. Staying the same is more likely the path for San Diego for the next year or so. JMO
@Nybka
I agree that San Diego’s numbers don’t necessarily reflect a comeback. The Navy contract MarkinSanDiego referenced did nothing more than prevent mass layoffs. In other words, the contract was a zero sum game because they still plan to do layoffs but not nearly as many as if the contract didn’t go through. here is the link…
http://www.signonsandiego.com/news/2011/may/27/nassco-gets-744-build-two-big-navy-hips/
I anticipate San Diego’s numbers to be “noisy” at best so long as two very important factors remain in play:
1.) The banks manipulating the market
2.) ….The banks manipulating the market
and maybe I can add
3.) high unemployment
Let’s note the NSDCC YOY changes for May:
Median price: +10%
Average price: +15%
You won’t see those on the evening news!
BTW, unemployment adds motivated sellers to the inventory, exactly what is in short supply around here.
The MSM noted that in areas where unemployment is getting better, home sales are still bad.
People can say jobs are the answer to housing, but newly-hired folks aren’t going out to buy a house anytime soon.
It’s good news to me as a buyer and a seller.
JtR- as usual, nice job cutting through the sound bytes to reveal actually useful and relevant data.
It seems the last 5 days have seen a big upswing in activity per SDLookup for sales, pendings, etc.
Inventory is also down from year ago levels.
http://www.redfin.com/CA/San-Diego/12694-Lupita-Ct-92130/home/4509319
This one just closed in Carmel Valley for $578K. It was last sold in July ’09 for $595K. Where is the 10%+ increase Jim?
Jim:
“The MSM noted that in areas where unemployment is getting better, home sales are still bad.
People can say jobs are the answer to housing, but newly-hired folks aren’t going out to buy a house anytime soon.”
Agreed. Jobs are the answer to housing, but that answer greatly depends on what the nature of those jobs are. Did the newly employed workers take a pay-cut in the same line of work? Are the new hires working under contract?
Newly hired people aren’t buying homes because…..wait for it….the banks require a steady job history when applying for financing.
or did I just disagree….I am confusing myself, now.
More quotes, from sddt.com:
“Folks are having so much difficulty in getting financing for a home,” said Mark Vitner, senior economist at Wells Fargo. “It may be early next year before prices hit bottom.”
Another obstacle to a rebound in prices: A delay in processing foreclosures. Homes in foreclosure sell for, on average, 20 percent discounts. When they do, they pull prices down further. But many foreclosure sales have been delayed while federal regulators, state attorneys general and banks review how those foreclosures were carried out over the past two years.
Once those homes are eventually foreclosed upon, they will trigger a further price drop in many markets.
The 12 cities now at their lowest levels in nearly four years are: Atlanta, Charlotte, Chicago, Cleveland, Detroit, Las Vegas, Miami, Minneapolis, New York, Phoenix, Portland, Ore., and Tampa.
Homes account for about a third of household wealth. So when prices fall, they have “important spillover effects on other sectors of the economy,” said Yelena Shulyatyeva, an analyst at BNP Paribas. The housing sector is struggling even as the overall economy is in the midst of a steady but slow recovery.
That won’t change soon. Roughly 92 percent of homeowners say it’s a bad time to sell their home, according to the latest Thomson Reuters/University of Michigan index of consumer sentiment.
Some of the sharpest price declines have occurred in cities hit hardest by unemployment and foreclosures, such as Phoenix, Tampa and Las Vegas. They are flooded with homes sitting vacant, awaiting buyers. Many banks have agreed to allow homes at risk of foreclosure to be sold for less than what is owed on their mortgages. That trend has pulled down prices.
Coastal areas, such as San Francisco, San Diego, Los Angeles, Washington and Boston, have fared comparatively better in the past two years. They have been aided by healthy local economies and low unemployment, desirable city centers and limited space for new housing.
Pump It Up!
http://www.youtube.com/watch?v=tpprOGsLWUo
People can say jobs are the answer to housing, but newly-hired folks aren’t going out to buy a house anytime soon.
Jim the Realtor | May 31st, 2011 at 9:16 am
I’m going to disagree with you here, particularly for the move-up markets like NCC…
Mid and upper level hires (say at Qualcom or a biotech) typically do buy houses when they get recruited to a new market, or at least that is my experience.
(condolences for you and yours about your uncle)
The effect job growth has on housing probably has more to do with people who are already employed starting to feel a bit less uncertain about their futures than with the finances of the newly-hired, except perhaps for those newly-hired who are moving in from outside the area.
Jobs that result in new household formation are important for the long term stability of the housing market, but it will take awhile for them to save a significant downpayment to buy a home. Looks like this year is the first year in a while where job prospects for new college grads are improving. If you figure the average college grad has 22,900 in debt and an average starting salary of $50K it’s going to take between 3-4 years of fairly aggressive saving to get to a 20% downpayment on a house 3-4x income.
Certainly as long as QCOM, ILMN, UCSD and others hire experienced out of state talent NCC/CV will have a decent buyer pool. Of course those people will likely have to sell or rent their old house to another household, which likely requires a new household formation somewhere in the chain.
Good jobs for new college/high school grads provides the fuel for the move up buyer chain.
““Everybody’s…wondering whether people just don’t want to own homes anymore,” he said.”
If “the only way to be rich is to flip homes” marked the top of the bubble, does this statement ring the bell at the bottom of the trough?
Right, so let’s sell our house at a distressed price and buy gold at all time highs. I think I’d rather just stay put and go against the herd, like a true black sheep.
I am in Jeeman’s camp on this one. Seems like there was a mini-bubble of euphoria last year, now it seems we are slowly/steadily seeing a trend of more and more people ‘giving up’ and capitulating which tells me we are getting more weak hands washed out.
Beginning to ease back in is a good idea if you are studied, deliberate, cautious, and tempered in your decisions.
Don’t outsmart your common-sense!
JTR – Take a look at the chart you posted. If you draw a line connecting the starting point with the recent bottom, it basically runs right through our current index level. Not scientific, but very interesting on a technical side.
Going from an index level of 100 in 2000 up to 153.88 is apx a 4% compounded growth rate. Considering how much SD has grown and matured since then, 4% doesn’t seem overly aggressive, just the high end of the range. Thus, it makes sense that pricing is firming in this current range.
For perspective, in 2006 at a peak of 250 on the index, SD’s pricing had compounded at apx 10.6%/yr….biggest red-flag warning sign ever.
ps: The 20 city composite has current pricing/index-levels slightly below the line.
Jim, as a resident of the DC metro area, I wouldn’t think of us as “coastal”, given the traffic-clogged 2 hour drive to the ocean.