The C-S index has its foibles, including the weighting of sales pairs based on when the previous sale happened, and also excludes flips and any other sales that occured less than six months apart.
But I’ll agree that the San Diego C-S index reflects the approximate trend and attitude on the street, generally speaking. While the media tends to focus on the distressed sales, there are plenty of other people – in fact, the majority of recent home sellers in Carmel Valley – who probably don’t mind how things turned out.
Here’s a review of the detached sales in 92130 over the last 90 days, categorized by when the sellers first purchased their home. Excluded in the averages are the sales over $1.5 million:
| CV Sales Pairs | 1998 and before | 1999-2003 | 2004-2007 | 2008-2011 |
| # of resolds last 90 days | ||||
| Average Gain/Loss | ||||
| REOs | ||||
| Short Sales |
Obviously the distress is focused around those who purchased during the peak years, but for the 60% majority who purchased before or after, they should be feeling satisfied to have done OK.
On a forward-looking note, for those who are thinking of buying at the optimal point where both rates and pricing are low, here is the recent history of how the mortgages rates compare to the San Diego Case-Shiller Index:
Does the average gain loss include selling costs such as Realtor commissions?
1999-2003 buyers are doing pretty well after commission in nominal terms. 900-181 = 729. 181-50/729 = 17.9% nominal gain after commission, 181/729 = 24.8% before commission.
CPI from 1999 to 2003 ranged from 164 to 183. Today CPI is 226. So inflation adjustment is somewhere between (226-164)/164 = 37.8% and (226-183)/226 = 23.4%. Inflation adjustment does point to a loss for those sellers. Looks like pre 1998 sellers are the only ones with a inflation adjusted positive return. Still not too bad when compared to other investments during that period, unless you were lucky enough to buy Gold or AAPL stock.
If I am reading the CS vs Rate graph, then that is a classic example of pushing on a string. The leading data point is the Freddie Avg 30 yr rate. That line is schizophrenic but trending down over time. However, the CS index for SD is going down steadily independently of the CS index. Once again, low interest rates is not goosing sales. Sales will strengthen when prices come down and/or unemployment gets better.
Is there any way to tell if those 1999 to 2003 buyers put money into landscaping and extras for new homes. that and selling costs can wipe out all or most of those profits too if not accounted for.
Oh Noooos!
http://www.latimes.com/business/la-fi-1025-housing-overhaul-20111025,0,3509088.story
I wish the government would just get out of the housing market. I also heard a rumor there might be student load debt forgiveness in the future. What could be possibly be the motivation for that?
No closing costs included, just calculating the difference between sales prices.
Good post livin. As prices continue to drop I just wonder where the traditional equity sellers are going to come from. If you bought in the last decade you are underwater especially when you figure commissions.
People who bought in the mid 90s are still doing great but they got in so cheap and such low property taxes that the properties are going to be great rental investments unless the owner took out the equity.
Then you get down to the early 90s and late 80s and you realize that nominal prices are basically flat with that time frame was well. So going back 25 years you only have really 5-10 years where an owner could have bought and still have any serious equity.
So buyers are left to choose between the bank deals and estate sales. Even with so few serious sellers, prices continue to drop indicating that there are even fewer serious buyers looking to pay today’s prices.
Very true Oggi. When you factor in:
1. Closing costs when you buy and sell
2. All the repairs you put into the property and upgrades
3. Realtor commission
…even if you bought 10+ years ago your are barely breaking even. Those figures do not factor in all these extra costs. That is pretty amazing even in coastal CA a lost decade+ with no gain at all. And by the end of this housing bust, it may be a lost 15+ years. You buy in say 2003, you may be still losing money or breaking even selling in 2015. You bought in 2005, you may be breaking even selling 2025!