A while back I started charting the ratio of home sales to mortgage defaults. A detailed explanation can be found in the original column, but the basic idea was that Notices of Default (NODs) can provide a rough indication of how much must-sell housing inventory is or soon will be on the market. When this number overwhelms housing demand, as measured by the number of single family home sales, prices tend to decline.

As of January, the number of sales per NOD — the amount of demand as compared to must-sell supply — was at a record low. Actually, "record low" doesn't really do justice to how low this number was. The accompanying graph shows that the worst January during the big bad bear market of the 1990s saw 1.05 single family sales per NOD. Last month, San Diego only experienced .3 single family sales per NOD.

Keep in mind that we are looking only at single family home sales (the only long-term series I could find) as opposed to NODs for all property types. Even still, that number is absolutely dismal. If potential must-sell housing supply was overwhelming demand back in the protracted downturn of the 1990s, it is now 3.5 times as overwhelming.

— RICH TOSCANO