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San Diego Case Shiller Index, Feb

The February month-over-month increase was the highest ever, but it feels like ancient history:

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%
Oct
363.80
+1.1%
+24.2%
Nov
367.62
+1.1%
+24.3%
Dec
374.48
+1.8%
+25.9%
Jan ’22
383.92
+2.5%
+27.2%
Feb
401.45
+4.6%
+29.2%

“U.S. home prices continued to advance at a very rapid pace in February,” says Craig J. Lazzara, Managing Director at S&P DJI. “The National Composite Index recorded a gain of 19.8% for the 12 months ended February 2022; the 10- and 20-City Composites rose 18.6% and 20.2%, respectively. All three composites reflect an acceleration of price growth relative to January’s level.

“The macroeconomic environment is evolving rapidly and may not support extraordinary home price growth for much longer. The post-COVID resumption of general economic activity has stoked inflation, and the Federal Reserve has begun to increase interest rates in response. We may soon begin to see the impact of increasing mortgage rates on home prices.”

(The San Diego seasonally-adjusted index was 404.45)

San Diego Case-Shiller Index, January

The prognosticators said prices would soften in 2022, but instead they have ‘reaccelerated’. Now the guessers are expecting the higher mortgage rates to slow down the runaway train – see below.

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%
Oct
363.80
+1.1%
+24.2%
Nov
367.62
+1.1%
+24.3%
Dec
374.48
+1.8%
+25.9%
Jan ’22
383.92
+2.5%
+27.2%

Our 383.92 is the non-adjusted; the seasonally adjusted index was 389.19 in January! From cnbc:

After cooling off ever so slightly toward the end of last year, home price gains reaccelerated in January.

Home prices nationally rose 19.2% year-over-year in January, up from 18.9% in December, according to the S%P CoreLogic Case-Shiller Index. The 10-city Composite annual increase was 17.5%, up from 17.1% in the previous month. The 20-city composite rose 19.1%, up from 18.6% in December.

Phoenix, Tampa and Miami saw the biggest annual gains at 32.6%, 30.8% and 28.1%, respectively. Sixteen of the 20 cities reported higher price increases in the year ending January 2022 versus the year ending December 2021.

Washington, D.C., Minneapolis and Chicago saw the smallest annual gain, although they were all still up double digits from a year ago.

Tight supply and strong demand appear to be outweighing rising mortgage rates, which would usually take some of the heat out of housing.

While the index is a three-month running average, mortgage rates began to climb in January. The average rate on the 30-year fixed ended 2021 at around 3.25% and ended January at 3.68% according to Mortgage News Daily. It is now flirting with 5%.

“The macroeconomic environment is evolving rapidly. Declining COVID cases and a resumption of general economic activity has stoked inflation, and the Federal Reserve has begun to increase interest rates in response. We may soon begin to see the impact of increasing mortgage rates on home prices,” said Craig Lazzara, managing director at S&P Dow Jones Indices.

Higher mortgage rates have already started to affect sales in the first months of the year. Pending home sales, which measure signed contracts on existing homes, have now fallen for four straight months, according to the National Association of Realtors.

“The monthly payment for a median-priced home has jumped 30% in the past year, far outpacing even fast-rising consumer prices, up almost 8% from a year ago,” said George Ratiu, senior economist at Realtor.com in a release. “While the small number of homes-for-sale will keep upward pressure on prices as we move through the Spring buying season, I expect conditions to undergo noticeable adjustments in the months ahead.”

NSDCC February Sales, Preliminary

It’s early, and the final February sales count will probably wind up around 165-170, which is in line with years prior to 2021. However, the pricing is nuts – and related to the number of homes for sale!

Year
February Listings
# of Sales
Median List Price
Median Sales Price
Median DOM
2017
395
172
$1,299,900
$1,270,000
51
2018
358
162
$1,290,000
$1,275,000
13
2019
361
174
$1,275,000
$1,275,000
33
2020
360
184
$1,434,000
$1,376,500
29
2021
313
224
$1,719,500
$1,758,000
14
2022
193
156
$2,149,500
$2,386,500
9

LAST MONTH, THE MEDIAN SALES PRICE WAS 11% HIGHER THAN THE MEDIAN LIST PRICE!

San Diego Case-Shiller Index, Dec.

San Diego had the fifth highest year-over-year gain in 2021, behind metros with much lower price points (Phoenix, Tampa, Miami, and Dallas).

Our month-over-month gain in December was #1 nationwide (tied with Miami).

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%
Oct
363.80
+1.1%
+24.2%
Nov
367.62
+1.1%
+24.3%
Dec
374.48
+1.8%
+25.9%

The experts have run out of superlatives, and roll out the same old explanations to describe the uptick in December – which was really the third month of the ramp-up into 2022:

Home prices rose 18.8% in 2021, according to the S&P CoreLogic Case-Shiller US National Home Price Index, the biggest increase in 34 years of data and substantially ahead of 2020’s 10.4% gain.

All regions saw price gains last year, but were strongest in the South and the Southeast, each up over 25%. Phoenix, Tampa and Miami reported the highest annual gains among the 20 cities in the index in December. Phoenix led the way for the 31st consecutive month with prices in December 32.5% over the year before. It was followed by Tampa with a 29.4% increase, and Miami with a 27.3% increase.

“We continue to see very strong growth at the city level,” said Craig J. Lazzara, Managing Director at S&P DJI. “All 20 cities saw price increases in 2021, and prices in all 20 are at their all-time highs.”

Over the past several months home prices have been rising at very high, but decelerating rates, said Lazzara. But that deceleration paused in December.

Lazzara said that strength in the US housing market is being driven in part by a change in location preferences as households react to the pandemic.

A persistent low inventory of homes dropped to record low levels in December, according to the National Association of Realtors. In the face of continued strong demand, prices were pushed higher. Newly constructed homes are in the pipeline, but a long-running shortage in supply combined with the lingering effects of the pandemic mean it will take years to meet demand.

“More data will be required to understand whether this demand surge simply represents an acceleration of purchases that would have occurred over the next several years rather than a more permanent secular change,” Lazzara said. “In the short term, we should soon begin to see the impact of increasing mortgage rates on home prices.”

Mortgage rates, which had risen only gradually since August, began to abruptly climb in late December closing in on the 4% threshold for a 30-year fixed-rate mortgage.

“Home prices continued to surpass expectations in December, but a marked change may be ahead for growth as rising mortgage rates eat into homebuyer purchasing power,” said Danielle Hale, Realtor.com’s chief economist. “While typical asking prices continue to accelerate, the pace of median sales price growth has slowed, signaling a potential gap between what buyers are willing and able to pay and what sellers are hoping to net.

Higher mortgage rates have added more than $200 to the monthly cost of a typical for-sale home since December 2020 — when rates were at all-time lows — with more than half of that increase occurring over the past eight weeks, Hale said.

“With home prices expected to continue rising, even at a slower pace, affordability will increasingly challenge 2022 buyers as a decade-long underbuilding trend has left the housing market 5.8 million homes short of household growth,” said Hale. “At the same time, we expect pandemic trends like workplace flexibility and competitive labor market conditions to give workers the boost in income and wider search areas they need to navigate a still-challenging housing market successfully.”

San Diego Home Pricing, Tiered

This guy has been drunk on the doom juice for so long that he must never get out of his bunker!

If he did, he would see the overwhelming demand for every new listing, even though underwriting standards are strict and rates are going up. Of the 140 NSDCC sales last month, 36% were all-cash.

https://journal.firsttuesday.us/san-diego-housing-indicators-2/29246/

Here’s what he said in July when the YoY changes were lower:

https://www.bubbleinfo.com/2021/07/08/san-diego-home-pricing-by-tier/

San Diego Case-Shiller Index, Nov.

We can see how MoM pricing started to slow at end of summer, only to have it pick up again in 4Q21:

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%
Oct
363.80
+1.1%
+24.2%
Nov
367.62
+1.1%
+24.3%

Mortgage rates didn’t move much in October and November, holding between 3% and 3.25% for the average on the popular 30-year fixed. While that was slightly higher than the early summer levels, it was still historically low and considerably lower than where rates are now. Rates are now about 75 basis points above year-ago levels. Low rates over the last two years have given buyers more purchasing power and consequently fueled today’s sky-high prices.

“We should soon begin to see the impact of increasing mortgage rates on home prices,” added Lazzara.

A recent report from Realtor.com found that 14 out of the top 50 largest U.S. cities experienced listing price declines over the prior year in December.

Case-Shiller Index, History

I saw this on Greg’s twitter, and thanks to Charlie too.  On the ground it seems like the market is wildly out of control, but looking at this chart it looks like we’re just one of the pack.

Does it give buyers any comfort to know that the price explosion is happening everywhere?

San Diego Case-Shiller, October


San Diego fell out of the top three cities for annual change – we’re down to #6 for October. But we have the highest home prices of those six cities!  Though every region had double-digit YoY gains, a few cities (Boston, Denver, Minneapolis, Portland, San Francisco, and Washington) look like they’ve pulled into Plateau City.

Remember a year ago when we hit +11.5% YoY and thought we’ve never had it so good?

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%
Oct
363.80
+1.1%
+24.2%

“In October 2021, U.S. home prices moved substantially higher, but at a decelerating rate,” says Craig J. Lazzara, Managing Director at S&P DJI. “The National Composite Index rose 19.1% from year-ago levels, and the 10- and 20-City Composites gained 17.1% and 18.4%, respectively. In all three cases, October’s gains were below September’s, and September’s gains were below August’s. That said, October’s 19.1% gain in the National Composite is the fourth-highest reading in the 34 years covered by our data. (The top three were the three months immediately preceding October.)

“We continue to see very strong growth at the city level. All 20 cities saw price increases in the year ended October 2021. October’s increase ranked in the top quintile of historical experience for 19 cities, and in the top decile for 17 of them. As was the case last month, however, in 14 of 20 cities, prices decelerated – i.e., increased by less in October than they had done in September.

“Phoenix’s 32.3% increase led all cities for the 29th consecutive month. Tampa (+28.1%) and Miami (+25.7%) continued in second and third place in October, narrowly edging out Las Vegas, Dallas, and San Diego. Prices were strongest in the South and Southeast (both +24.4%), but every region continued to log double-digit gains.

“We have previously suggested that the strength in the U.S. housing market is being driven in part by a change in locational preferences as households react to the COVID pandemic. More data will be required to understand whether this demand surge represents an acceleration of purchases that would have occurred over the next several years, or reflects a more permanent secular change.”

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.

San Diego Case-Shiller Index, August

Lower volume could keep the index elevated. We had 382 sales last October, and today we’re at 189 for the month with four days to go plus late-reporters. We should end up with about the same as in 2019 (240).

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%

“Persistently strong demand among traditional homebuyers has been amplified by an increase in demand among investors this summer,” said Selma Hepp, deputy chief economist at CoreLogic. “While strong home price appreciation rates are narrowing the pool of buyers, particularly first-time buyers, the depth of the supply and demand imbalance and robust demand among higher-income earners will continue to push prices higher.”

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