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Last week’s release of the Case-Shiller index showed an increase in aggregate San Diego home prices in June:

However, the seasonally-adjusted version of the index shows that once the typical early-summer strength is adjusted for, prices actually declined:

The second graph suggests that any price increase was due to seasonal factors, not to enduring strength in the market.  All other things equal, prices should start to decline once we get to the time of year when seasonality ceases to be a positive factor.  (This change in seasonal influence has already happened in that thing they call “real life,” but not in the more-than-two-months-delayed world of the Case-Shiller index).

A look at the index since its 2005 peak makes the “bouncing along the bottom” terminology that some pundits have used look like a pretty good fit:

Before the bears start sending me hate mail, I should note that use of the phrase “bouncing along the bottom” does not preclude the possibility that prices could go lower.  It’s just an expression.

In any case, this description is even more apt when the Case-Shiller index is adjusted for inflation, which shows that in real terms, home prices bounced modestly starting in 2009 and are now nearly back to their lows.  (The high-priced tier actually made new post-bubble lows a few months back).

On to the slightly less delayed world of median resale home prices, the median price per square foot went absolutely nowhere in July:

The more interesting July data point was the increase in the number of months of inventory for sale:

If this number were to continue creeping up, it would hint at more pronounced weakness in future prices.  However, the level of inventory is not at such a level yet (at least, it wasn’t as of July).  Perhaps some clues will be found in the August data, which I hope to post in a much more timely manner than the July data.

Rich Toscano is a financial advisor with Pacific Capital Associates*.  He can be contacted at

Rich Toscano

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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