San Diego 92101 Pricing Power Index

PPI Update June 07

posted by Joe Fiorelli @ 1:29 PM 0 comments

Labels: June 07 Update

posted by Joe Fiorelli @ 1:18 PM 0 comments

New Link for PPI

posted by Joe Fiorelli @ 11:30 AM

Are sellers too slow in lowering prices?

Yellow trend line shows that despite an average loss of $1000 per week per 1000 SQ FT, sellers are still slow in lowering prices.

See San Diego 92101 Condo Pricing Power Index at JoeFiorelli.com

posted by Joe Fiorelli @ 2:43 PM 0 comments

Bull - Bear Case for Current 92101 Condo Market

1. Non Housing related jobs are still strong with unemployment rate only 4.3%
2. Interest Rates at still at historical lows
3. Prices will flatten out, there will be no “crash”
4. Larger inventory gives buyers more choice time to buy
5. We are just moving toward a more stabilized and balanced market
6. Home ownership is always better for you financially and now is a good time to buy

92101 Bear Case Response

1. San Diego County jobs growth slowing down from avg 17400 per month to July 06 avg of 900 jobs added
2. Interest Rates are artificially low and overdue for a 150 basis point correction to 8.5%, closer to the historical average. This will be devastating for overleveraged buyers and speculators (maybe 30% of the market)
3. Average PPSF has been slowing coming down and shows no sign of flatting out. Recent trends show a loss of $1 PSF per week. We are now in a housing correction they only unknown is how bad that correction will be top to bottom. Some say -40% ???
4. Sales are down 27% from a year ago. Inventory will get increasingly oversupplied as more units come to market in 07 & 08. Sellers now have “dream” list prices which will add to unsold inventory
5. We are already well into a Buyers market which will get even stronger for buyers with cash (who are not interest rate sensitive) in 07. The market is showing increasing foreclosure rates, ever increasing sales incentives and falling list price to sale price ratios
6. Its much cheaper to rent than to buy right now e.g. condo depreciation rates are larger than rental cost (1M condo will fall at least 9.2 % in 06 =92K; rental of same unit about 35-40K per year which does not include sales cost, taxes, huge HOA fess, etc.). Buying at tops is never good … it could be many years before we see another top.

posted by Joe Fiorelli @ 8:54 PM 0 comments

YTD Weekly Price Trend.

posted by Joe Fiorelli @ 8:46 PM 0 comments