One Month Worth!

Tomorrow we will get the latest pricing data via the Case-Shiller Index.

Last month, San Diego was #3 in the nation with a 12.3% YoY increase, and we should see a similar number tomorrow – only because we may have taken a bit of a breather (see the trend above).

We could see slower appreciation just because there aren’t enough homes selling to reach max momentum:

Months’ Supply of San Diego County Houses For Sale Over 2,000sf:

In previous Januarys (the typical low point for the year) we still had around 3-months worth (or more), but now the houses for sale in the county is down to about one-months’ worth of supply!

If we had a surge of new listings that doubled the current inventory, it’s very likely that there is enough demand to soak it up – and cause prices to go up faster!

More 2020 Forecast

Above you can see how our market compares to others, and below is the history of our ‘months of supply’.  I said in the video yesterday that I thought the NSDCC sales in 2020 will be down 10% year-over-year mostly because there aren’t enough reasonably-priced homes to sell (or conversely, there aren’t enough buyers who can/will overpay for the multi-million-dollar homes).

I think you can see some of the price resistance lately as the orange line got into the 3s the last two years. We’ve seen how the velocity of the price increases has slowed considerably and when that happens, the natural next step for the market is fewer sales.

The orange line hit 3.0 in April of this year, when the previous April it was only 2.4, which means the inventory grew quicker at the start of the selling season. Expect the same in 2020, and when buyers see a rapidly growing inventory, it’s natural for them to be cautious and picky.

Inventory Watch

Thanks to Daytrip who sent in this article which has a few different opinions on market conditions, and demonstrates the numerous variables in the housing equation.  This excerpt from a New York appraiser by trade:

The outcome is that high-end listings languish for longer periods of time—until sellers come down in price. But an uptick in transactions as sellers offer discounts to buyers does not necessarily indicate that a market is improving. Rather, this can be seen as evidence that buyers have been patient and sellers are now pricing their homes more realistically.

Here is a reminder of the differences based on price – the number of months’ worth of inventory, which used to be considered normal when around six:

Price Range
NSDCC Actives
2018 Avg Sales per Mo.
# of Months’ of Inventory
1.3 months
2.5 months
3.8 months
10.4 months

The 1.3 months’ worth of inventory on the lower end looks red-hot, and the 10.4 months on the high-end looks sluggish – and all in the same area!

Price will fix anything!


Home Appreciation & Supply

John has an in-depth article out on home-price appreciation, and he’s no ivory-tower guy – his staff is on the street daily:

An excerpt:

Rolling it all up, we are projecting 4% price appreciation for the country next year, with wild variations by market, huge vulnerability to changing mortgage rates, and a wide variety in risk levels (San Francisco looks to be in a mini bubble, but bubbles can go on for quite some time, while Atlanta looks to be very underpriced).



He mentioned that the best measure of pricing trends is the “number of months of supply of homes”.  He didn’t say what he considers ‘normal’, and not sure we’ll ever have that again anyway!  But it used to be that six months of supply was considered balanced.

Here are the current active listings of detached homes, divided by August closed sales:

NSDCC: 1,100/244 = 4.51 months.

SD County: 5,814/1,885 = 3.08 months.

I’m not sure how much you can read into this statistic though, because 867 (79%) of the NSDCC homes for sale are priced over $1,000,000, and only 1,086 sales have closed over $1,000,000 this year.  If we divide the 1,086 by 8.5 = 128 per month, which means there is an approximate 6.8-month supply of million-dollar homes for sale currently.

But following this stat over time would identify the trend.  I’ve added a new category so we can track it from now on!

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