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.

San Diego Tiered Pricing Graph

No surprise the trend shows the higher the price, the softer the price increases.

The lower-end market keeps humming along, while the higher-end market isn’t – and the connection between the two is getting fuzzier by the day.

With the struggle of moving up or down being very real, we could see more disconnect between markets.

Let’s keep this in mind when analyzing trends – it’s more complex than ever.

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

San Diego Case-Shiller Index, October

The San Diego Case-Shiller Index dropped for the fourth month in a row, and was about the same as it was in April. We will probably keep heading downward for the next few months, but at least the latest reading wasn’t as bad as the last two months – only down 0.1%!

We will probably lose another 1% or 2% between now and Spring, 2019, which would put the index back to about where it was in February.

What happens in next year’s selling season will be the real test.

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
257.18
-0.5%
+4.7%
Sept
256.06
-0.4%
+3.9%
Oct
255.76
-0.1%
+3.7%

The previous peak was 250.34 in November, 2005.

Shiller on Today’s Market

Link to NYTimes article

We are, once again, experiencing one of the greatest housing booms in United States history.

How long this will last and where it is heading next are impossible to know now.

But it is time to take notice: My data shows that this is the United States’ third biggest housing boom in the modern era.

Since February 2012, when the price declines associated with the last financial crisis ended, prices for existing homes in the United States have been rising steadily and enormously. According to the S&P/CoreLogic/Case-Shiller National Home Price Index (which I helped to create) as of September, the prices were 53 percent higher than they were at the bottom of the market in 2012.

That means, on average, a house that sold for, say, $200,000 in 2012 would bring over $300,000 in September.

Even after factoring in Consumer Price Index inflation, real existing home prices were up almost 40 percent during that period. That is a substantial increase in less than seven years.

(more…)

San Diego Case-Shiller Index, Sept

The San Diego Case-Shiller Index dropped for the third month in a row, and is now almost 1% below where it was in June.  It’s not a surprise to hear that we have tougher sledding in the off-season (see above).

We will probably lose another 1% or 2% between now and Spring, 2019, which would put the index back to about where it was in February.

What happens in next year’s selling season will be the real test.

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
258.46
0.0%
+6.2%
Aug
257.24
-0.5%
+4.7%
Sept
256.35
-0.3%
+3.9%

The previous peak was 250.34 in November, 2005.

San Diego Case-Shiller Index, August

The San Diego Case-Shiller Index has begun its usual flatness a little earlier this year, and we might see it drop a couple of points in the coming months.  But never fear, Blitzy is here!

“Following reports that home sales are flat to down, price gains are beginning to moderate,” said David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices in a release. “Rising prices may be pricing some potential home buyers out of the market, especially when combined with mortgage rates approaching 5 percent for 30-year fixed rate loans.”

“There are no signs that the current weakness will become a repeat of the crisis, however. In 2006, when home prices peaked and then tumbled, mortgage default rates bottomed out and started a three year surge,” said Blitzer. “Today, the mortgage default rates reported by the S&P/Experian Consumer Credit Default Indices are stable. Without a collapse in housing finance like the one seen 12 years ago, a crash in home prices is unlikely.”

Link to CNBC article

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
255.66
+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
257.21
-0.5%
+4.7%

As expected, the June and July numbers were revised, making the August reading the second consecutive MoM decline.

The previous peak was 250.34 in November, 2005.

Usual Seasonal Change, or Panic Time?

Rob Dawg predicted it that any and all appreciation will happen in the first half of the year – and if we’re just talking about the general trends in local San Diego pricing, that’s how it has been lately.

As the red circles show in the graph above, the non-seasonally-adjusted SD Case-Shiller Index has a history of cooling off in the second half of the year.

Will the same seasonal event happen again in 2018?

Most likely – our June and July index numbers were the same this year, so it’s likely to stay flat, or even soften a bit like last year.  But were talking fractions, not big chunks.

The number of sales are another thing, however.  Few sellers NEED to sell, so while buyers might offer less, it takes two to tango.

The CNBC article that tried to paint a negative slant on the New York market included this quote:

“Offers 20 percent and 25 percent below asking prices began to flow in, a phenomenon last seen in 2009,” wrote Warburg Realty founder and CEO Frederick W. Peters”.

While few sellers struck deals at those radically reduced offer prices, they signal a major shift in our marketplace, one which has been building for at least 18 months,” Peters said.

Sellers aren’t going for it.

They might knock off a few points, but unless they are unusually desperate, they are going to sit on their presumed equity and wait until next year if they have to.  Sales would have to grind to a halt for sellers to think about dumping on price.

There will be just enough action to keep the sellers optimistic too.  Here are a set of homes that were marked pending today that could make you think everything is fine:

Another agent has this one, but you saw it here last time around:

This is in La Costa Valley, which has been starting to show it age when you’re talking about 20-year old Carlsbad tract houses now over a million. But this had the updated and appealing look, and the first buyer took it:

My friends in Olde Carlsbad went pending too:

I know they aren’t closed yet, and at least one of those will probably fall out.  My point?  The market isn’t dead, or even sleeping – it’s just finding its way.

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