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San Diego Case Shiller Index, September

‘Deceleration’ at +24.9% YoY compared to when our market was just ramping up for the year-end frenzy of 2020? I’ll take it!

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%
Jun
274.91
+0.5%
+5.0%
Jul
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%
Jun
349.78
+2.6%
+27.2%
Jul
355.33
+1.6%
+27.8%
Aug
357.11
+0.5%
+26.2%
Sep
359.88
+0.8%
+24.9%

“If I had to choose only one word to describe September 2021?s housing price data, the word would be ‘deceleration,’ says Craig Lazzara, managing director at S&P Dow Jones Indices. “Housing prices continued to show remarkable strength in September, though the pace of price increases declined slightly.”

Extremely tight inventory, as well as heavy investor activity in the housing market, is keeping prices elevated. While the gains are falling, it is unlikely that prices will drop dramatically as they did during the housing crash. The fundamentals of supply and demand still favor an expensive market.

“The market has cooled since the beginning of the year, when dozens of competing bids, contingency waivers and price escalation clauses made home shopping a struggle, especially for first-time buyers. A growing number of homeowners are preparing to list in the next six months, hinting at an uncharacteristically active winter season,” said George Ratiu, manager of economic research at Realtor.com.

NSDCC Frenzy History

Can we learn from the past frenzy periods?

We didn’t have the huge price increases in 2001-2002 mostly because there was plenty of inventory to go around. It was more of a sales frenzy, which finally started to slow in 2004 as prices exploded.

I left out the 2007-2011 era:

The inventory dipped to an unprecedented low level in 2021, causing buyers to scramble for those homes that were for sale.  We’ve had the most sales since the last frenzy of 2013, and will probably end the year with a total number of sales in the Top Five of All-Time.

Fewer listings make the pursuit more challenging, but this frenzy will continue until prices get high enough to cause sales to slow down.  Keep an eye on the number of sales – our leading indicator!

Over List, October

The insanity is finding a comfortable range…..until next spring:

NSDCC Detached-Home Sales, % Closed Over List Price

January: 38%

February: 43%

March: 53%

April: 55%

May: 54%

June: 59%

July: 64%

August: 55%

September: 41%

October: 45%

A slight uptick in the overall percentage, but the high-end buyers aren’t going for this nonsense any more:

Percentage Of Sales Over List Price by Price Range

Price Range
March
April
May
June
July
Aug
Sept
Oct
$0 – $1.0M
76%
79%
89%
88%
89%
88%
64%
78%
$1.0M – $1.5M
68%
78%
84%
75%
74%
74%
37%
64%
$1.5M – $2.0M
66%
66%
72%
66%
82%
73%
61%
58%
$2.0M – $3.0M
54%
32%
34%
66%
56%
56%
36%
38%
$3M+
16%
22%
22%
17%
26%
19%
24%
7%

October saw new highs in average list and sales prices, which would indicate strong action in the higher-end homes.  The medians have been fairly steady:

NSDCC Average and Median Prices

Month
# of Sales
Avg. LP
Avg. SP
Median LP
Median SP
Feb
224
$2,298,797
$2,257,334
$1,719,500
$1,758,000
March
252
$2,295,629
$2,260,524
$1,800,000
$1,825,000
April
357
$2,396,667
$2,403,962
$1,799,900
$1,828,000
May
300
$2,596,992
$2,581,715
$1,900,000
$1,994,500
June
348
$2,509,175
$2,537,953
$1,900,000
$1,967,500
July
311
$2,421,326
$2,442,738
$1,795,000
$1,855,000
Aug
268
$2,415,075
$2,438,934
$1,897,000
$1,950,000
Sept
278
$2,479,440
$2,445,817
$1,899,000
$1,987,500
Oct
248
$2,754,470
$2,705,071
$1,899,000
$1,899,500

The average sales price increased 30% YoY, and the median sales price is up 13% YoY, but that is also compared to the 382 sales last October – which was, and will always be, the most sales in any October.

As sales taper off over the next 2-3 months, it might cause a little more volatility in these pricing metrics.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

More Appreciation in 2021?

People are leery when the squid speaks, but they could be right about additional price gains in 4Q21.

Here’s why:

  1. We had a 15% increase in the NSDCC median sales price between September, 2020 and January.
  2. There will be fewer sales this year, which typically provides more volatility.
  3. Frustrated buyers will pass on the fixers, and wait ’til next year instead.
  4. With the sales mix having a bigger percentage of superior homes, pricing should get a boost.

My #1 reason?  We’ve experienced intense frenzy conditions, and it has gotten to the point where the comps don’t seem to matter any more. Buyers just want a house, and they will pay whatever it takes!

Frenzy Volume

Rob Dawg suggested that the total volume of the frenzy must be remarkable.

Both sales and pricing are higher, and the higher-end markets have never had it so good.

NSDCC Total Sales Volume, First Three Quarters of the Year

Year
# of Sales Under $2M
Dollar Volume
# of Sales Over $2M
Dollar Volume
2017
1,938
$2,241,780,605
459
$1,465,970,635
2018
1,712
$2,094,987,871
464
$1,562,253,960
2019
1,686
$2,079,217,390
478
$1,626,984,079
2020
1,661
$2,135,713,260
554
$1,974,229,362
2021
1,403
$2,066,211,128
1,148
$4,102,211,128

Remarkable indeed! The affluent have commandeered the market.

Over List – September

Here is where the cooling-frenzy shows up.

The number of buyers who are willing to pay over list price is dropping:

NSDCC Detached-Home Sales, % Closed Over List Price

January: 38%

February: 43%

March: 53%

April: 55%

May: 54%

June: 59%

July: 64%

August: 55%

September: 41%

To have 41% of the sales close over list price would be remarkable….if it weren’t for the last six months!

Percentage Who Paid Over List Price by Price Range

Price Range
March
April
May
June
July
Aug
Sept
$0 – $1.0M
76%
79%
89%
88%
89%
88%
64%
$1.0M – $1.5M
68%
78%
84%
75%
74%
74%
37%
$1.5M – $2.0M
66%
66%
72%
66%
82%
73%
61%
$2.0M – $3.0M
54%
32%
34%
66%
56%
56%
36%
$3M+
16%
22%
22%
17%
26%
19%
24%

The average sales prices have been virtually identical for the last three months, and the median sales price is back up to where it was in May:

NSDCC Average and Median Prices

Month
# of Sales
Avg. LP
Avg. SP
Median LP
Median SP
Feb
224
$2,298,797
$2,257,334
$1,719,500
$1,758,000
March
252
$2,295,629
$2,260,524
$1,800,000
$1,825,000
April
357
$2,396,667
$2,403,962
$1,799,900
$1,828,000
May
300
$2,596,992
$2,581,715
$1,900,000
$1,994,500
June
348
$2,509,175
$2,537,953
$1,900,000
$1,967,500
July
311
$2,421,326
$2,442,738
$1,795,000
$1,855,000
Aug
268
$2,415,075
$2,438,934
$1,897,000
$1,950,000
Sept
278
$2,479,440
$2,445,817
$1,899,000
$1,987,500

Compared to last September, the average sales price was +25%, and the median sales price was +33%!

Sales should taper off the rest of the year, but not sure if pricing will follow!

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Affluent Frenzy

The 3/4 Report!

NSDCC Detached-Home Listings and Sales between Jan 1st and September 30

Year
# of Listings
# of Sales
Median Sales Price
# of Sales Over $2,000,000
2017
3,888
2,385
$1,230,000
459
2018
3,977
2,166
$1,320,000
464
2019
3,947
2,148
$1,320,000
478
2020
3,677
2,207
$1,424,000
554
2021
3,072
2,519
$1,880,000
1,140

We usually have roughly 3,900 listings in the first three quarters of each year, until covid hit. This year, there were 21% fewer listings, yet sales have soared – up 14% above 2020 sales.

The median sales price is up 32% YoY, and the sales over $2,000,000 have MORE THAN DOUBLED last year’s previous record count!

Frenzy Monitor

The reason for breaking down the active and pending listings by zip code is to give the readers a closer look at their neighborhood stats.

It’s interesting to see that the total number of actives and pendings are so similar – as close as they were in late-June as the max frenzy was unwinding. The big split in the counts on August 11th made it look like the frenzy was coming apart, but they’ve gotten back in line nicely since:

But with fewer homes for sale combined with the time of year, we probably won’t see much change.  Let’s call it low-grade frenzy conditions for now.

The average days on market is creeping upward, but still no big concerns. There will always be sellers who would rather wait for the lucky sale, than adjust their price – and longer average market times indicate more sellers doing the former. Though we should note that the hottest range ($1.5 – $2.0) must have a lot of dogs lying around:

San Diego County has experienced the worst YoY change of active listings IN THE NATION. Three thousand houses for sale in a county of 3.3 million people? Yikes!!

And that was the August report.  Today in San Diego County:

ACTIVES: 1,760

PENDINGS: 2,600

Wow!

San Diego County Median Sales Price, History

While we’re talking about the median sales price of detached-homes in San Diego County, let’s review the last ten years. There usually is some dropoff towards the end of the year:

The last frenzy in 2013 saw the median sales price increase 26% between January and September.

The Greatest Frenzy of All-Time started with closings in May, 2020 that had a median sales price of $660,000. It peaked in June/July at $875,000, which is a 33% increase and lasted five more months than in 2013. I’m happy with it, the fun was great while it lasted, and now here we are.

Well, at least until 2022.

There was some hesitancy in the market at the end of 2013, but it took off again in 2014.

Look at the difference though (the graph is interactive).

The increase was only +7% between September, 2013 and June, 2014 before it decelerated again – and the median sales price in November was back to where it was in the previous September!

Sellers should appreciate the big boost we’ve had, and the uncertainty of the future.  Don’t attempt to time the market for max return – it’s great where it is today.

Out-of-State Price Premiums

One factor that will slow down the exodus is the increased difficulty of moving out of state – it’s not easy, or cheap, to buy a home outside of California any more. But fewer people leaving will mean less inventory – and could ramp up the frenzy in 2022.

The researchers used open-source data from Zillow or other providers to score the top 100 overvalued or undervalued metro areas in the nation, ranking the cities by a percent premium homebuyers are paying in today’s market based on a history of past pricing.

Here’s how the top 10 rankings landed, according to the research:

  • Boise, Idaho, where homes are selling at an 80.6% premium.
  • Austin, Texas, at a 50.7% premium.
  • Ogden, at a 49.7% premium.
  • Provo, at a 46.2% premium.
  • Detroit, at a 45.6% premium.
  • Spokane, Washington, at a 45.2% premium.
  • Salt Lake City, Utah, at a 42.4% premium.
  • Phoenix at a 42.3% premium.
  • Las Vegas at a 41.9% premium.
  • Stockton, California, at a 38.5% premium.

The typical value of homes in Boise was over $523,300 as of the end of August, up more than 46% over the past year, according to Zillow.

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