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San Diego Case-Shiller Index, May

Phoenix edged us out again for the top spot in May, but the San Diego CSI went up 12.4% between February and May, which looks like a record for four months of appreciation – and at these prices!

San Diego Non-Seasonally-Adjusted CSI changes

Observation Month
SD CSI
M-o-M chg
Y-o-Y chg
Jan ’20
264.04
+0.2%
+5.1%
Feb
265.34
+0.5%
+4.6%
Mar
269.63
+1.6%
+5.2%
Apr
272.48
+1.1%
+5.8%
May
273.51
+0.4%
+5.2%
June
274.91
+0.5%
+5.0%
July
278.00
+1.1%
+5.4%
Aug
283.06
+1.8%
+7.6%
Sep
288.11
+1.8%
+9.4%
Oct
292.85
+1.6%
+11.5%
Nov
295.64
+1.0%
+12.3%
Dec
297.52
+0.6%
+13.0%
Jan ’21
301.72
+1.4%
+14.3%
Feb
310.62
+2.9%
+17.1%
Mar
320.81
+3.3%
+19.1%
Apr
331.47
+3.3%
+21.6%
May
341.05
+2.9%
+24.7%

“Housing price growth set a record for the second consecutive month in May 2021,” says Craig J. Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P DJI. “The National Composite Index marked its twelfth consecutive month of accelerating prices with a 16.6% gain from year-ago levels, up from 14.8% in April. This acceleration is also reflected in the 10- and 20-City Composites (up 16.4% and 17.0%, respectively)”.

The market’s strength continues to be broadly-based: all 20 cities rose, and all 20 gained more in the 12 months ended in May than they had gained in the 12 months ended in April. Prices in 18 of our 20 cities now stand at all time highs, as do the National Composite and both the 10- and 20-City indices.

“A month ago, I described April’s performance as “truly extraordinary,” and this month I find myself running out of superlatives. The 16.6% gain is the highest reading in more than 30 years of S&P CoreLogic Case-Shiller data. As was the case last month, five cities – Charlotte, Cleveland, Dallas, Denver, and Seattle – joined the National Composite in recording their all-time highest 12-month gains. Price gains in all 20 cities were in the top quartile of historical performance; in 17 cities, price gains were in top decile”.

“We have previously suggested that the strength in the U.S. housing market is being driven in part by reaction to the COVID pandemic, as potential buyers move from urban apartments to suburban homes. May’s data continue to be consistent with this hypothesis. This demand surge may simply represent an acceleration of purchases that would have occurred anyway over the next several years. Alternatively, there may have been a secular change in locational preferences, leading to a permanent shift in the demand curve for housing. More time and data will be required to analyze this question”.

“Phoenix’s 25.9% increase led all cities for the 24th consecutive month, with San Diego (+24.7%) and Seattle (+23.4%) close behind. As was the case last month, prices were strongest in the West (+19.9%) and Southwest (+19.8%), but every region logged double-digit gains.”

Everything’s a Million

Ok, ok, the prices have gone nuts and you’re wondering what you can buy if you just go a little further out.

Here’s an estate-like property on a half acre in the rural area of Vista just outside of Shadowridge that’s still south of the 78 so it’s closer than you might think.

It’s a 3br/2.5ba, 2,630sf house on a half-acre with pool that listed for $1,099,000. Sounds reasonable, right?

It closed for $1,240,000 on July 7th.

Inventory Watch

Last week we saw the big dropoff in the Under-$1,000,000 range as the pricing of low-end homes between La Jolla and Carlsbad shot upward. Today there are four houses for sale under $1M.

Here is the $1,000,000 to $1,500,000 range:

On July 29, 2019, we had 192 active listings (avg. $494/sf) and 120 pending listings.

Last year at this time we had 122 active listings (avg. $544/sf) and 169 pendings.

Today we have 45 actives (avg. $693/sf) and 85 pendings.

The number of active listings has collapsed, dropping 77% in two years. No wonder the average cost-per-sf has increased 40% during the same period!

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Home Design Hacks on a Budget

You may not have the budget for floor-to-ceiling renovations but that doesn’t mean you can’t still make a big difference to a home’s appearance. Interior designers from across the country respond to the question: What is your favorite summer design hack on a dime?

Here’s what they said:

1. Refresh the Color

“What works for summer—and all year round, really—is making a statement with color. A fresh coat of paint on the wall or repainting your furniture and adding new hardware offers a renewed look to any room. Don’t be afraid to try cool, summery colors; they create a tranquil mood to the space.”

See full list here:

https://www.nar.realtor/blogs/styled-staged-sold/5-favorite-home-design-hacks-on-a-budget

No Foreclosures Coming

Regardless where the inventory goes (likely to retreat), the potential home buyers should stay interested, just because of rates staying low.  Many of them may be looking forward to when the foreclosures start pouring in. 

What’s the latest on the delinquencies/forbearances?  From Black Knight:

Total U.S. loan delinquency rate (loans 30 or more days past due, but not in foreclosure): 4.37%

– Month-over-month change: -7.62%
– Year-over-year change: -42.39%

Total U.S. foreclosure pre-sale inventory rate: 0.27%

– Month-over-month change: -1.73%
– Year-over-year change: -24.23%

Total U.S. foreclosure starts: 4,400

– Month-over-month change:  15.79%
– Year-over-year change: -25.42%

Top 5 states by 90-plus days delinquent percentage:

Mississippi: 4.89%

Louisiana: 4.59%

Hawaii: 4.14%

Nevada: 4.14%

Maryland: 4.08%

The takeaway:

The national delinquency rate is at its lowest level since the pandemic hit, even below the pre-Great Recession average.

While there’s been improvement, however, there are still 1.5 million homeowners 90 or more days past due on their mortgages but who are not in foreclosure—nearly four times pre-pandemic levels.

There are 1.5 million homeowners who are 90+ days late but who are not in foreclosure? Do you need any more evidence that lenders aren’t interested in foreclosing?  They will give loan mods when they get around to it.

It’s a great time to be a deadbeat!

Post-Frenzy Forecast

The prognostications are coming in about the direction of home prices.

It’s easy to predict that the market won’t be as hot as it’s been (or will it?).

The Burns forecast will be as good any of the guesses, and don’t be surprised if all of them end up predicting a goose egg over the next 1-3 years as we pull in Plateau City. Sellers shouldn’t mind much, because they picked up a whopping 31.6% increase during the 2020-2021 Greatest Real Estate Frenzy of All-Time.

There will be some potential sellers – probably those who don’t need to move, have plenty of time, and aren’t going to give it away – who are waiting for the market to top out.

You can’t blame them.  It’s been a hellava party over the last year, and they don’t want to leave any money on the table.  They will be the sellers who provide the extra inventory that will help moderate the pricing.

But I’m going to take the OVER.

There are two things that can cause moderation; sales and pricing.

It’s likely that one of these two things will happen:

  1. Either sales will drop due to ultra-low inventory, and prices keep rising, or
  2. Inventory does increase a bit, which boosts sales – but causes prices to flatten.

The 31.6% increase in pricing did put a dent in the affordability, but homes were already expensive and available only to the affluent anyway.  They will still have the horsepower to pay a little more in 2022 and 2023, but they will be more picky than ever about what they are willing to buy.

I’m taking #1, and guess that sales will drop, but sellers who can find a buyer will be getting a premium.

They are predicting that the BHVI will go up 5% next year, and 3% in 2023.

I think the BHVI will rise 10% next year, and 6% in 2023 – and agree with their 0% in 2024.

Instant Inventory

Abalone Landing Terrace in Carmel Valley has had a typical frenzy – low inventory and rapidly rising prices.  There were two sales that closed in 2020 – one $1,650,000 in July and $1,780,000 in October.

At the end of May, 2021 a new listing hit the open market at $1,950,000, and was promptly bid up to $2,120,000. It closed on July 8th, and it must have gotten other residents thinking.

Four new listings have hit the market in the last week:

https://www.compass.com/listing/10545-abalone-landing-terrace-san-diego-ca-92130/827464186068610169/

https://www.compass.com/listing/10569-abalone-landing-san-diego-ca-92130/825523085738089617/

https://www.compass.com/listing/10540-abalone-landing-terrace-san-diego-ca-92130/826913112627057657/

https://www.compass.com/listing/10448-abalone-landing-terrace-san-diego-ca-92130/831161978141937465/

This is a street of 50 homes, with about half of them still owned by the original purchaser from 2002-2003.  After having only three sales in the last two years, the four new listings in a week is shocking!

It’s Carmel Valley, so there probably won’t be an issue with these selling.  But it shows how quickly the market can change, and provide the buyers with even more data to consider.

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