The Morning Report
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After rising for seven months in a row, San Diego resale home prices finally took a breather in November. The median price per square foot actually rose by .9 percent for condos, but it dropped by 1.3 percent for single family homes, of which many more are sold. A volume-weighted aggregate of the two dropped by .7 percent for the month, ending the streak that began in April.
In keeping with themes recently expounded upon, I don’t see much predictive value in this change. We have entered real estate’s slow season, so mild price weakness is par for the course. We also saw a frenzy of activity in prior months partly due to the belief that the homebuyer tax credit would expire. (The credit ended up being renewed for another six months, but the deadline-conscious buyers of earlier months didn’t know that would happen.) With another six months in front of them to get the credit, November’s buyers may have gotten a bit more choosy for a time, resulting in less upward price pressure.
And, of course, it’s just one month’s worth of data.
So the end of the winning streak doesn’t necessarily mean that we are entering another long-term downtrend in home prices.
Of course, that outcome is within the realm of possibility, but this single month of home price data is certainly not enough to make that determination. In any case, as I discussed in the prior article, that is more a political question than an economic one at this point.
— RICH TOSCANO