San Diego Case-Shiller Index, August

Mortgage rates have been 1% lower than they were a year ago, yet sales are flat….and so are prices. We had a 2.3% improvement year-over-year, which is actually the best percentage improvement in 2019.  But look at how our Y-o-Y changes have pancaked this year, compared to 2018:

San Diego Non-Seasonally-Adjusted CSI changes:

Observation Month
SD CSI
M-o-M chg
Y-o-Y chg
January ’18
248.16
+0.8%
+7.3%
February
250.91
+1.1%
+7.5%
March
253.41
+1.0%
+7.6%
April
255.63
+0.9%
+7.7%
May
257.07
+0.6%
+7.3%
Jun
258.44
+0.6%
+6.9%
Jul
258.49
0.0%
+6.2%
Aug
257.32
-0.5%
+4.7%
Sept
256.13
-0.4%
+3.9%
Oct
255.26
-0.1%
+3.7%
Nov
253.37
-0.6%
+3.3%
Dec
251.68
-0.7%
+2.3%
January ’19
251.30
-0.2%
+1.3%
Feb
253.69
+0.9%
+1.1%
Mar
256.40
+1.1%
+1.2%
Apr
257.63
+0.5%
+0.8%
May
260.08
+1.0%
+1.1%
June
261.90
+0.7%
+1.3%
July
263.66
+0.7%
+2.0%
Aug
263.23
-0.2%
+2.3%

This latest month-over-month reading did go negative again, just like it did in August of last year.  Will we have six consecutive months of negative readings in 2019, and send our index back into the 250s?  If so, 2020 will probably look a lot like 2018 and 2019, price-wise.

San Diego Case-Shiller Index, July 2019

Yesterday, Yunnie said that he sees no sign of buyer optimism fading, to which I said ‘just wait for the Case-Shiller Index (which should be the strongest of the year)’.

CNBC posted the click bait above, which is shocking because they are usually so negative about real estate – then published the key points below:

Mortgage rates dropped back into the threes at the end of May, yet the national index didn’t change between June and July?  Every other time buyers could get a mortgage rate that started with a 3, they’ve come running.  But not this time – home prices are stalled year-over-year, and existing home sales in the West declined 3.4% in August.

But never fear, our head cheerleader won’t let that get in the way:

Lawrence Yun, NAR’s chief economist said, “As expected, buyers are finding it hard to resist the current rates,” he said. “The desire to take advantage of these promising conditions is leading more buyers to the market.”

What he should say is that sellers should be sharpening their price. You’re on our side Yunnie, help us out!

San Diego Non-Seasonally-Adjusted CSI changes:

Observation Month
SD CSI
M-o-M chg
Y-o-Y chg
January ’18
248.16
+0.8%
+7.3%
February
250.91
+1.1%
+7.5%
March
253.41
+1.0%
+7.6%
April
255.63
+0.9%
+7.7%
May
257.07
+0.6%
+7.3%
Jun
258.44
+0.6%
+6.9%
Jul
258.49
0.0%
+6.2%
Aug
257.32
-0.5%
+4.7%
Sept
256.13
-0.4%
+3.9%
Oct
255.26
-0.1%
+3.7%
Nov
253.37
-0.6%
+3.3%
Dec
251.68
-0.7%
+2.3%
January ’19
251.30
-0.2%
+1.3%
Feb
253.69
+0.9%
+1.1%
Mar
256.40
+1.1%
+1.2%
Apr
257.63
+0.5%
+0.8%
May
260.01
+1.0%
+1.1%
June
261.77
+0.7%
+1.3%
July
263.58
+0.7%
+2.0%

The index is a three-month weighted average, so July closings should reflect the environment where mortgage rates were 3-something for the buyers.  But they aren’t willing to pay 1% more than in June?

Looks like a sign of buyer optimism fading to me.

San Diego Bubble vs. Other Cities

Our Case-Shiller Index did set a new record yesterday, but our Housing Bubble 2 is relatively tame – just 4% above the previous peak of 250.34 in November, 2005.

Compare to others like Seattle (+33% over last peak), San Francisco (+41%), and Denver (+59%) here:

https://wolfstreet.com/2019/08/27/the-most-splendid-house-price-bubbles-in-america-august-update-western-markets-see-the-dip/

San Diego Case-Shiller Index, May

We had a solid 1% increase in our local index M-o-M, and it was about the same year-over-year:

San Diego Non-Seasonally-Adjusted CSI changes:

Observation Month
SD CSI
M-o-M chg
Y-o-Y chg
January ’18
248.16
+0.8%
+7.3%
February
250.91
+1.1%
+7.5%
March
253.41
+1.0%
+7.6%
April
255.63
+0.9%
+7.7%
May
257.07
+0.6%
+7.3%
Jun
258.44
+0.6%
+6.9%
Jul
258.49
0.0%
+6.2%
Aug
257.32
-0.5%
+4.7%
Sept
256.13
-0.4%
+3.9%
Oct
255.26
-0.1%
+3.7%
Nov
253.37
-0.6%
+3.3%
Dec
251.68
-0.7%
+2.3%
January ’19
251.30
-0.2%
+1.3%
Feb
253.69
+0.9%
+1.1%
Mar
256.44
+1.1%
+1.2%
Apr
257.63
+0.5%
+0.8%
May
260.17
+1.0%
+1.2%

From cnbc on today’s Pending-Home-Sales increase of 2.8% nationally:

“If mortgage rates remain near recent lows, we could see prices pick back up as a result of improved affordability as well as the possibility of more limited inventory available,” said Danielle Hale, chief economist for Realtor.com.

The supply of homes for sale had been rising for much of this year but flattened in June. Some are predicting inventory will be lower again this fall. That is causing more competition in the market.

“Homes are selling at a breakneck pace, in less than a month, on average, for existing homes and three months for newly constructed homes,” said Yun. “Homeowners’ equity in real estate has doubled over the past six years to now nearly $16 trillion. But the number of potential buyers exceeds the number of homes available. We need to see sizable growth in inventory, particularly of entry-level homes, to assure wider access to homeownership.”

Regionally, the Realtors’ pending home sales index rose 2.7% in the Northeast month-to-month and was 0.9% higher than a year ago. In the Midwest, the index grew 3.3% monthly and 1.7% annually. In the South, the index increased 1.3% monthly and 1.4% annually. In the West, pending sales jumped 5.4% monthly and were 2.5% higher than a year ago.

San Diego Case-Shiller Index, April

Yesterday’s Zillow index showed San Diego’s pricing to be fairly flat, and now April’s Case-Shiller Index has a similar-sounding +0.8% increase year-over-year.

We’ve bounced back from six months of negative readings, just to get back to where we were last year – and we’re still not as high as the June and July 2018 readings:

San Diego Non-Seasonally-Adjusted CSI changes:

Observation Month
SD CSI
M-o-M chg
Y-o-Y chg
January ’18
248.16
+0.8%
+7.3%
February
250.91
+1.1%
+7.5%
March
253.41
+1.0%
+7.6%
April
255.63
+0.9%
+7.7%
May
257.07
+0.6%
+7.3%
Jun
258.44
+0.6%
+6.9%
Jul
258.49
0.0%
+6.2%
Aug
257.32
-0.5%
+4.7%
Sept
256.13
-0.4%
+3.9%
Oct
255.26
-0.1%
+3.7%
Nov
253.37
-0.6%
+3.3%
Dec
251.68
-0.7%
+2.3%
January ’19
251.30
-0.2%
+1.3%
Feb
253.66
+0.9%
+1.1%
Mar
256.39
+1.2%
+1.3%
Apr
257.68
+0.5%
+0.8%

The high-tier index is similar with just a +0.5% increase over last April, and not as high as June, 2018:

From cnbc:

San Diego Case-Shiller Index, March

I calculated the monthly increase incorrectly last month – it’s right now, and it shows that the index has picked up steam lately. But we’re still slightly below last year’s peak of 258 in June & July:

San Diego Non-Seasonally-Adjusted CSI changes:

Observation Month
SD CSI
M-o-M chg
Y-o-Y chg
January ’18
248.16
+0.8%
+7.3%
February
250.91
+1.1%
+7.5%
March
253.41
+1.0%
+7.6%
April
255.63
+0.9%
+7.7%
May
257.07
+0.6%
+7.3%
Jun
258.44
+0.6%
+6.9%
Jul
258.49
0.0%
+6.2%
Aug
257.32
-0.5%
+4.7%
Sept
256.13
-0.4%
+3.9%
Oct
255.26
-0.1%
+3.7%
Nov
253.37
-0.6%
+3.3%
Dec
251.68
-0.7%
+2.3%
January ’19
251.30
-0.2%
+1.3%
Feb
253.69
+0.9%
+1.1%
Mar
256.63
+1.2%
+1.3%

The index is 3.4% higher than it was at the beginning of 2018, but it could be worse.

This NYC broker says homeowners in Manhattan can figure what their home was worth in May, 2018, and then subtract 10% to find today’s value – yikes!

San Diego Case-Shiller Index, Feb

Hey, we had our first monthly increase since June!

Last year the index readings topped out in July, and if that pattern repeats, it will mean that today’s home prices will be the highest of the year.

San Diego Non-Seasonally-Adjusted CSI changes:

Reporting Month
SD CSI
M-o-M chg
Y-o-Y chg
January ’17
231.21
+0.8%
+5.7%
February
233.31
+0.9%
+6.5%
March
235.61
+1.0%
+6.4%
April
237.48
+0.8%
+6.6%
May
239.84
+1.0%
+6.5%
June
241.96
+0.9%
+7.0%
Jul
243.48
+0.6%
+7.1%
Aug
245.55
+0.9%
+7.8%
Sept
246.61
+0.5%
+8.2%
Oct
246.58
+0.0%
+8.1%
Nov
245.74
-0.3%
+7.4%
Dec
246.29
+0.2%
+7.4%
January ’18
248.16
+0.8%
+7.3%
February
250.91
+1.1%
+7.5%
March
253.41
+1.0%
+7.6%
April
255.63
+0.9%
+7.7%
May
257.07
+0.6%
+7.3%
Jun
258.44
+0.6%
+6.9%
Jul
258.49
0.0%
+6.2%
Aug
257.32
-0.5%
+4.7%
Sept
256.13
-0.4%
+3.9%
Oct
255.42
-0.1%
+3.7%
Nov
253.59
-0.6%
+3.3%
Dec
251.92
-0.7%
+2.3%
January ’19
251.37
-0.2%
+1.3%
Feb
253.70
+0.1%
+1.1%

Over the last week, we’ve seen soundbites on how home prices declined in Southern California and San Francisco for the first time in seven years, but they are talking about the median sales price – which declined a measly 0.1%.  Expect the talking heads to focus on up or down only.

We’re going to be lucky to keep pace with last year’s monthly increases:

Last year the February month-over-month increase was 1.1%, and this year it was only 0.1%.  But because the focus is so binary (up or down only), we might escape further scrutiny as long as we can hit a +0.1% each month.

But it’s pretty likely that our local year-over-year readings are going to go negative next month – right as the selling season wraps up.  Winter might start early this year!

San Diego Case-Shiller Index, Jan

I was so giddy yesterday about dropping rates that the latest Case-Shiller Index didn’t cross my mind. Our doomer guy jumped on the sixth consecutive decline above, but that was when we were nearing 5% mortgage rates and full market stall-out. Now that the sub-4% punch bowl is back, we should see the usual six months of increases begin again with the next reading:

San Diego Non-Seasonally-Adjusted CSI changes:

Reporting Month
SD CSI
M-o-M chg
Y-o-Y chg
January ’17
231.21
+0.8%
+5.7%
February
233.31
+0.9%
+6.5%
March
235.61
+1.0%
+6.4%
April
237.48
+0.8%
+6.6%
May
239.84
+1.0%
+6.5%
June
241.96
+0.9%
+7.0%
Jul
243.48
+0.6%
+7.1%
Aug
245.55
+0.9%
+7.8%
Sept
246.61
+0.5%
+8.2%
Oct
246.58
+0.0%
+8.1%
Nov
245.74
-0.3%
+7.4%
Dec
246.29
+0.2%
+7.4%
January ’18
248.16
+0.8%
+7.3%
February
250.91
+1.1%
+7.5%
March
253.41
+1.0%
+7.6%
April
255.63
+0.9%
+7.7%
May
257.07
+0.6%
+7.3%
Jun
258.44
+0.6%
+6.9%
Jul
258.49
0.0%
+6.2%
Aug
257.32
-0.5%
+4.7%
Sept
256.13
-0.4%
+3.9%
Oct
255.42
-0.1%
+3.7%
Nov
253.59
-0.6%
+3.3%
Dec
251.92
-0.7%
+2.3%
Jan
251.37
-0.2%
+1.3%

The 2.8% drop over the last six months is nothing but a flesh wound – sellers aren’t going to panic until there are big chunks of decline per month. The previous peak was 250.34 in November, 2005 – about where we are today!

San Diego Case-Shiller Index, Dec.

We are back to more-normal appreciation levels now.  After dropping for the last six months in a row, the non-seasonally-adjusted Case-Shiller Index for San Diego is just +2.3% year-over-year.

In the graph above, you can see how the index goes up about ten points in the first half of every year, but then pricing tapers off.  Last year, the tapering started earlier, and was more pronounced.

It makes you wonder what will happen in 2019? The same? Or worse?  It won’t be better unless mortgage rates slip under 4%.

San Diego Non-Seasonally-Adjusted CSI changes:

Reporting Month
SD CSI
M-o-M chg
Y-o-Y chg
January ’17
231.21
+0.8%
+5.7%
February
233.31
+0.9%
+6.5%
March
235.61
+1.0%
+6.4%
April
237.48
+0.8%
+6.6%
May
239.84
+1.0%
+6.5%
June
241.96
+0.9%
+7.0%
Jul
243.48
+0.6%
+7.1%
Aug
245.55
+0.9%
+7.8%
Sept
246.61
+0.5%
+8.2%
Oct
246.58
+0.0%
+8.1%
Nov
245.74
-0.3%
+7.4%
Dec
246.29
+0.2%
+7.4%
January ’18
248.16
+0.8%
+7.3%
February
250.91
+1.1%
+7.5%
March
253.41
+1.0%
+7.6%
April
255.63
+0.9%
+7.7%
May
257.07
+0.6%
+7.3%
Jun
258.48
+0.6%
+6.9%
Jul
258.41
0.0%
+6.2%
Aug
257.25
-0.5%
+4.7%
Sept
256.06
-0.4%
+3.9%
Oct
255.44
-0.1%
+3.7%
Nov
253.67
-0.6%
+3.3%
Dec
251.91
-0.7%
+2.3%

The previous peak was 250.34 in November, 2005 – about where we are today!

“Slower price appreciation coupled with lower mortgage rates in 2019 should help homebuyers who haven’t been priced out of the market,” said Danielle Hale, chief economist at Realtor.com. “While 2018 started with a real estate frenzy and ended with a fizzle, we could see 2019’s slow beginning start to pick up later in the year.”

San Diego Case-Shiller Index, Nov

The non-seasonally-adjusted San Diego Case-Shiller Index dropped again in November, which seems like 100 years ago now that we’re rolling into February. A couple of notes:

  1. If you like your data processed and refined, the seasonally-adjusted index has been flat the last four months. I like mine raw and uncooked.
  2. They revise these numbers slightly every month.

We are roughly back to where we were in March.  You could make the case that the better-quality homes sell for a premium during the selling season while the others wait, and then some of those go for a slight discount in the off-season.  It might be the pattern for every year, going forward.

San Diego Non-Seasonally-Adjusted CSI changes:

Reporting Month
SD CSI
M-o-M chg
Y-o-Y chg
January ’17
231.21
+0.8%
+5.7%
February
233.31
+0.9%
+6.5%
March
235.61
+1.0%
+6.4%
April
237.48
+0.8%
+6.6%
May
239.84
+1.0%
+6.5%
June
241.96
+0.9%
+7.0%
Jul
243.48
+0.6%
+7.1%
Aug
245.55
+0.9%
+7.8%
Sept
246.61
+0.5%
+8.2%
Oct
246.58
+0.0%
+8.1%
Nov
245.74
-0.3%
+7.4%
Dec
246.29
+0.2%
+7.4%
January ’18
248.16
+0.8%
+7.3%
February
250.91
+1.1%
+7.5%
March
253.41
+1.0%
+7.6%
April
255.63
+0.9%
+7.7%
May
257.07
+0.6%
+7.3%
Jun
258.48
+0.6%
+6.9%
Jul
258.41
0.0%
+6.2%
Aug
257.25
-0.5%
+4.7%
Sept
256.06
-0.4%
+3.9%
Oct
255.46
-0.1%
+3.7%
Nov
253.85
-0.6%
+3.3%

The previous peak was 250.34 in November, 2005.

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