The first month of 2011 was unkind to home prices, at least as measure by the median price per square foot of resale homes sold during the month.  From December to January, this measure of home prices declined by 3.0 percent for detached homes, 7.2 percent for condos, and 4.5 percent in aggregate.

As I often note, the condo series is quite volatile so these big single-month moves can be safely ignored.  But the detached home median price per square foot has typically given a fairly good read on actual price changes going on in the market, so the 3.0 percent decline there suggests that market pricing was indeed lower on the whole.

In fairness, January is a seasonally weak month for home prices, but the above chart shows that prices have been on the decline since the assorted stimulus efforts started to fizzle out last summer.

Below are some graphs on supply and demand over the past few years.  Each line represents a year, but because 2011 only has one data point so far, the 2011 “line” appears as a single red diamond in January.

Closed sales were down for the month, which the graph shows isn’t too meaningful, as closings typically drop in January.  Closed sales were down just 2.8 percent on a year-over-year basis.

While “closed sales” counts the number of homes that closed escrow during the month, “pending sales” measures the number that went into escrow, hopefully to be closed at a future date (likely within a month or two).  Just as closed sales decline in January, pending sales tend to increase.  This January was no different.  The number of pending sales was almost exactly unchanged from its year-ago level.

Inventory was also almost exactly where it was in a prior January, but this time it was January 2009.  The number of homes for sale was actaully 21.3 percent higher than a year prior. 

Thanks to a combination of a jump in pendings and a slight decline in inventory, the number of months’ worth of inventory for sale declined to 5.7 months.  Again, this is right on top of the January 2009 number, but is 20.9 percent higher than the same month last year.

It remains to be seen whether months of inventory will be able to drop significantly in the months ahead — that is, whether the pace of sales can pick up faster than new inventory growth.  It could certainly happen as we approach the typically strong spring season.  But if it does not, further price declines could be waiting in the wings.

Please contact Rich Toscano at and follow him on Twitter at

Rich Toscano has been observing the housing market for Voice of San Diego, with the occasional prolonged absence, since 2006. Follow him on Twitter at...

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