Monday, January 16, 2006

San Diego is Crashing

The Union Tribune has this important news. "San Diego County resale house prices tumbled last month by the biggest number in 18 years of record-keeping and contributed to the smallest year-to-year rise in overall prices in six years, DataQuick reported Monday. The median resale price for existing single-family homes dropped $15,000 from November to December to stand at $550,000, the largest month-to-month decline since DataQuick began keeping records in 1988."

"Last year was the first time since 2001 that the number of home sales fell from the previous year. The total sold last year was 55,366, down 9.1 percent from 2004's 60,886. This also was not a surprise, since monthly sales reports from DataQuick have showed a decline in activity on a year-over-year basis for 18 straight months."

"The total number of listings has been growing, reaching a peak of just over 15,000 listings in November, about five times more than at the peak of the buying frenzy in spring 2004. Consequently, sellers report few if any bidding wars for their properties, and buyers say they have more time to consider their choices."

San Diego is farther along the bubble curve then most other bubble markets. San Diego is a leading indicator as to what is likely to happen in other bubble markets.


  1. I am waiting for the same thing to happen in DC area. I hope it will happen.

  2. Real estate has been cold as ice in Connecticut- despite what the local realtors say- houses and condo's are sitting- and inventory is building. Housing this year 'will not rise' say the Connecticut association of Realtors. Well if stuff does not sell- sellers will have to reduce- so the hop that prices will 'not fall' seems an unlikely scenario.

  3. I'm a renter who is a big time believer that we have a massive housing bubble. I also believe that house prices will return to some sort of real price closer to where they were in 2001 or earlier. (Note, nominally that may be higher, but only if incomes also rise).

    Having said that, I personally (not an expert) think this process is going to take 5-6 years to play out, or maybe even more. IMHO, sellers aren't going to break en masse this spring or summer or fall. It took years for Japan's property bubble to hit bottom, and I suspect the same fate for ours.

  4. As I remember, at its peak, the real estate in Tokyo was valued higher than all the real estate in the US at the time.

    Exaggeration maybe, but certainly an indication that the bubble in US metro areas is not nearly as advanced as the Japanese one was.

    No I am not a cheerleader, I lived in San Dog for five years and was priced out in the first eight months. Sunshine is not on the housing forecast, but neither is doom and gloom (SD and some regions excepted).

  5. San Diego's population migration

    For those who believe San Diego's property values are well supported because of the demand to live here, consider the following:

    On January 19, 2006 I obtained a one-way quote from to rent a 10' truck on 1-26-06 from San Diego, CA to Las Vegas, NV. The cost was $300. The same quote with the direction revered was only $104, about 2/3rds less!

    For a large truck the quotes were $600 and $174 respectively.

    That alone should tell you that far more people are leaving San Diego than arriving, and that's based on just one location. So many people are renting trucks one-way out of San Diego, that they have to price them high enough to pay people to go and retreive them.

    I found the same pricing disparity for every city I've heard San Diegans are moving to, i.e., Phoeniz, AZ, et al and some of the disparities were as high as 10-1 all higher to rent one-way leaving San Diego.

    This same phenomenon occurred during the last housing crash in 1992, but rates weren't available on the medium Al Gore created ; ) so you had to continually call Uhaul's 800# over and over again to discover the pricing disparity and their operators weren't too fond of me for doing it : )

  6. I read an interesting report last week about migration. I believe it was put out by United Vanlines. They has been tracking this sort of data for at least 25years. It showed net migration out of the northeast and California. Gains for the Southeast and Midwest. Also showed 5 and 10 year trends.

    The article was a link from the Wall Street Journal Housing Bubble Blog. Interesting stuff.

  7. Agree, checkout this blog about the San Diego house flippers in trouble