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San Diego

Hat tip to Dennis for the cnbc.com report on July home sales in San Diego:

http://www.cnbc.com/id/101919762

Their report references the DQ report from Wednesday:

2014 July sales

Downer Diana noted that last month’s total was a three-year low, but didn’t mention that the frenzy started in the second half of 2012. As long as we are comparing to frenzy months, the 2014 totals will be lower – no frenzy now.

Let’s consider how last month’s sales of San Diego detached homes compare to previous years:

Year
# of SD Detached-Home Sales in July
2000
1,958
2001
2,291
2002
2,364
2003
2,871
2004
2,603
2005
2,338
2006
1,644
2007
1,470
2008
1,979
2009
2,170
2010
1,777
2011
1,900
2012
2,211
2013
2,402
2014
1,905

The July, 2014 sales look pretty good, given how high prices are now, and how fast they rose. Higher mortgage rates helped to cool off the frenzy too.

As a community, we should prefer a non-frenzy environment.

But the media insists that something is wrong. Diana said, “California is often seen as a barometer for the rest of the nation’s housing market. If that is the case, then housing this fall is not looking good.”

It looks good to me!

We know that when sales start declining, prices usually follow. But Rob Dawg noted this benefit here – payments are still cheaper than before:

The typical monthly mortgage payment Southland buyers committed themselves to paying last month was $1,602, down from a revised $1,616 the month before and up from $1,537 a year earlier.

Adjusted for inflation, last month’s typical payment was 34.4 percent below the typical payment in the spring of 1989, the peak of the prior real estate cycle. It was 46.3 percent below the current cycle’s peak in July 2007.

http://www.dqnews.com/Articles/2014/News/California/Southern-CA/RRSCA140813.aspx

In some areas we will probably see a few homes sell for less – neighborhoods where long-time owners have loads of equity and can still make out nicely at 5% to 10% under comps. But with so little pressure, it’s more likely that sellers will cancel and wait until next year, rather than dump on price.

Sales will probably keep dropping with the only folks selling are those who deserve a premium price – the turnkey homes in good locations – which in turn will slow any price declines.

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