City average: 42.4% off the peak, 46.9% above December 1999 level
Top tier: 19.7% off the peak, 77.5% above December 1999 level
Middle tier: 41.5% off the peak, 49.1% above December 1999 level
Bottom tier: 48.2% off the peak, 49.4% above December 1999 level
Two lower tiers are cheapest they were since the summer of 2002. If you take inflation and low interest rates into account, houses in San Diego have not been so affordable since 1999.
Friday, January 2, 2009
Monday, December 15, 2008
November '08 HPI
City average: 41.1% off the peak
Top tier: 20.3% off the peak
Middle tier: 39.1% off the peak
Bottom tier: 47.9% off the peak
4% drop in one month in the top tier. Sales volume took a hard hit, too. The number of repeat sales in the top tier is down 50% month-to-month. This is probably the consequence of the stock market crash - that's where people with significant stock portfolios shop for their houses. Sales volumes in the other two tiers dropped by much smaller amounts - 10% and 14%.
Bottom tier as a whole is back to May '02, middle tier is back to September '02. 54-94 area solidified its position as the place with most severe price declines: a typical house in 54-94 is worth 48.4% of what it would've gone for at the peak in April-May '06.
Top tier: 20.3% off the peak
Middle tier: 39.1% off the peak
Bottom tier: 47.9% off the peak
4% drop in one month in the top tier. Sales volume took a hard hit, too. The number of repeat sales in the top tier is down 50% month-to-month. This is probably the consequence of the stock market crash - that's where people with significant stock portfolios shop for their houses. Sales volumes in the other two tiers dropped by much smaller amounts - 10% and 14%.
Bottom tier as a whole is back to May '02, middle tier is back to September '02. 54-94 area solidified its position as the place with most severe price declines: a typical house in 54-94 is worth 48.4% of what it would've gone for at the peak in April-May '06.
Sunday, December 7, 2008
Neg-ams in San Diego
Downward pressure on house prices in San Diego has been in part caused by foreclosures. In the last few months, the supply of new foreclosures on the market has been reduced to a trickle. Mortgage modifications are getting increasingly popular. In a mortgage modification, lender agrees to lower the principal or the interest rate for a delinquent borrower and/or to transfer the modified loan to FHA. Jim the Realtor has a number of comments on this subject.
There's a catch. The lender will not reduce the principal much lower than the market value, and the borrower must qualify for a modified mortgage, fully documenting his income, with strict income limits.
And that's what brings us to neg-ams. A negative amortization loan is the one where monthly payment is insufficient to cover all interest accrued, making the principal grow rather than shrink over time. Neg-am borrowers' houses are way bigger and more expensive than they can realistically afford. Even after 30+% principal reductions, they are very unlikely to be able to pay modified mortgages. In addition, many neg-am borrowers were "investors" (owners of multiple non-owner-occupied properties), these obviously aren't getting any modifications. Areas with high densities of neg-ams will continue to produce foreclosures well into 2009 and possibly 2010. So, it's good to know where they are. Unfortunately, this kind of information is not readily available. We have to improvise.
I went through a database of all foreclosures that took place in San Diego County between July and November. There were approximately 10,000 of them. For every foreclosure, public sources give us 1) the initial loan amount, 2) the delinquency amount ( sum of all missed payments when the loan was declared in default ), 3) "sale amount" - the amount which the bank hopes to recover through foreclosure. #3 includes the balance on the loan on the day the borrower stopped paying, missed payments, late fees, and legal fees incurred by the bank. By subtracting #2 from #3, we can estimate the balance.
Inspection of the data quickly reveals a pattern. Half of all foreclosures have #3-#2 in the range between 101% and 104% of the initial balance. These are well known subprime interest-only loans. The bank needs to get back full amount loaned, and probably 1-4% of loan balance in legal fees.
Another big group of foreclosures has #3-#2 between 107% and 115% of the initial balance. These loans have lower interest rates. In this group, there's a noticeable correlation between the "sale amount" and the age of the loan. Loans in this category tend to grow 4-5% a year - the characteristic feature of a neg-am.
Overall, approximately a quarter of all foreclosures since July appear to have been caused by a neg-am. Neg-ams are everywhere. They are somewhat overrepresented in South Bay (44% of foreclosures in 91914, 37% in 91913, 32% in 92154). 92154 (San Ysidro) had the largest absolute number of suspected neg-ams in the dataset. 92037 (La Jolla) and 92109 (Pacific Beach) had relatively few foreclosures, but many of these were neg-ams. Weak prices in these areas should be expected to continue for some time, despite modification efforts.
Here's a random example of negative amortization. On 5/17/2006, Michael Ghanayem bought a 1,827 sf unit D102 in Seahaus condo complex in La Jolla, two blocks from the beach, for $1,090,000 with 10% down. Two months later, he refinanced into a $990,000 loan from "No Red Tape Mortgage" (later adding a $250k second from WaMu). On 11/17/2008, the condo was repossessed by the bank. Sale amount was $1,143,400. In two years, loan balance has grown at least 10%.
Here's another one. On 12/10/2003, Therese Ghanayem bought a house in a gated community in Santaluz (7378 Los Brazos) for $823,500. On 7/12/2005, the house was refinanced into two loans with Countrywide, $995k and $350k. First loan ended up in foreclosure on 8/15/2008. Sale amount was $1,133,294.
Both Seahaus D102 and 7378 Los Brazos are currently bank-owned and off the market. It's not clear what happened to Michael & Therese Ghanayem. With more than half a million tax-free dollars pulled out just from these two properties using cash-out refis, they can probably afford to retire in the Caribbean. (Incidentally, Michael is a 1998 Mt. Carmel High alumnus. That makes him 28 or so today.) But I digress.
Rural areas appear to have escaped this problem to some degree. Ramona (92065), north Escondido (92026), El Cajon (92020, 92021) have considerable numbers of foreclosures caused by "old-fashioned" subprime loans, but neg-am percentages in all these are below 20%.
There's a catch. The lender will not reduce the principal much lower than the market value, and the borrower must qualify for a modified mortgage, fully documenting his income, with strict income limits.
And that's what brings us to neg-ams. A negative amortization loan is the one where monthly payment is insufficient to cover all interest accrued, making the principal grow rather than shrink over time. Neg-am borrowers' houses are way bigger and more expensive than they can realistically afford. Even after 30+% principal reductions, they are very unlikely to be able to pay modified mortgages. In addition, many neg-am borrowers were "investors" (owners of multiple non-owner-occupied properties), these obviously aren't getting any modifications. Areas with high densities of neg-ams will continue to produce foreclosures well into 2009 and possibly 2010. So, it's good to know where they are. Unfortunately, this kind of information is not readily available. We have to improvise.
I went through a database of all foreclosures that took place in San Diego County between July and November. There were approximately 10,000 of them. For every foreclosure, public sources give us 1) the initial loan amount, 2) the delinquency amount ( sum of all missed payments when the loan was declared in default ), 3) "sale amount" - the amount which the bank hopes to recover through foreclosure. #3 includes the balance on the loan on the day the borrower stopped paying, missed payments, late fees, and legal fees incurred by the bank. By subtracting #2 from #3, we can estimate the balance.
Inspection of the data quickly reveals a pattern. Half of all foreclosures have #3-#2 in the range between 101% and 104% of the initial balance. These are well known subprime interest-only loans. The bank needs to get back full amount loaned, and probably 1-4% of loan balance in legal fees.
Another big group of foreclosures has #3-#2 between 107% and 115% of the initial balance. These loans have lower interest rates. In this group, there's a noticeable correlation between the "sale amount" and the age of the loan. Loans in this category tend to grow 4-5% a year - the characteristic feature of a neg-am.
Overall, approximately a quarter of all foreclosures since July appear to have been caused by a neg-am. Neg-ams are everywhere. They are somewhat overrepresented in South Bay (44% of foreclosures in 91914, 37% in 91913, 32% in 92154). 92154 (San Ysidro) had the largest absolute number of suspected neg-ams in the dataset. 92037 (La Jolla) and 92109 (Pacific Beach) had relatively few foreclosures, but many of these were neg-ams. Weak prices in these areas should be expected to continue for some time, despite modification efforts.
Here's a random example of negative amortization. On 5/17/2006, Michael Ghanayem bought a 1,827 sf unit D102 in Seahaus condo complex in La Jolla, two blocks from the beach, for $1,090,000 with 10% down. Two months later, he refinanced into a $990,000 loan from "No Red Tape Mortgage" (later adding a $250k second from WaMu). On 11/17/2008, the condo was repossessed by the bank. Sale amount was $1,143,400. In two years, loan balance has grown at least 10%.
Here's another one. On 12/10/2003, Therese Ghanayem bought a house in a gated community in Santaluz (7378 Los Brazos) for $823,500. On 7/12/2005, the house was refinanced into two loans with Countrywide, $995k and $350k. First loan ended up in foreclosure on 8/15/2008. Sale amount was $1,133,294.
Both Seahaus D102 and 7378 Los Brazos are currently bank-owned and off the market. It's not clear what happened to Michael & Therese Ghanayem. With more than half a million tax-free dollars pulled out just from these two properties using cash-out refis, they can probably afford to retire in the Caribbean. (Incidentally, Michael is a 1998 Mt. Carmel High alumnus. That makes him 28 or so today.) But I digress.
Rural areas appear to have escaped this problem to some degree. Ramona (92065), north Escondido (92026), El Cajon (92020, 92021) have considerable numbers of foreclosures caused by "old-fashioned" subprime loans, but neg-am percentages in all these are below 20%.
Saturday, November 22, 2008
Election map
Perhaps you'll find this interesting:
Election results are from San Diego Registrar of Voters; precinct boundaries are from SanGIS, parsed with Shapefile library. I used the map of Congressional Districts as the background - that was the highest-resolution map of San Diego I could find. (I tried to stitch together a map from Google Maps screenshots, but that didn't work so well - I couldn't get the election overlay to match geographic features perfectly.)
All precincts with 20 or more recorded votes are shown.
It's striking how little opposition there is for Prop 8 outside North County coast and central neighborhoods (Hillcrest, South Park & such). Most neighborhoods south of 94 vote for Obama and Yes on 8. Same with Indian reservations (Pala, Barona, Santa Ysabel) and democratic pockets in Escondido and El Cajon.
Election results are from San Diego Registrar of Voters; precinct boundaries are from SanGIS, parsed with Shapefile library. I used the map of Congressional Districts as the background - that was the highest-resolution map of San Diego I could find. (I tried to stitch together a map from Google Maps screenshots, but that didn't work so well - I couldn't get the election overlay to match geographic features perfectly.)
All precincts with 20 or more recorded votes are shown.
It's striking how little opposition there is for Prop 8 outside North County coast and central neighborhoods (Hillcrest, South Park & such). Most neighborhoods south of 94 vote for Obama and Yes on 8. Same with Indian reservations (Pala, Barona, Santa Ysabel) and democratic pockets in Escondido and El Cajon.
Sunday, November 9, 2008
Mandatory election post
Every blogger seems to have something to say about our recent election. Here's my try.
This is how different parts of San Diego County voted on November 4th.
All numbers come from here.
Rural areas are pro-McCain, central San Diego neighborhoods (e.g. Golden Hill, South Park) are heavily pro-Obama. Hillcrest and North Park favor Obama 5 to 1. In Fairbanks Ranch and Rancho Santa Fe, 67% of votes went for McCain, but neighboring Del Mar Heights and Solana Beach vote 57-59% for Obama. (Carmel Valley is probably part of Del Mar Heights in their definition)
Hillcrest is the most liberal, deep East County (Campo, Descanso, Boulevard) is the most conservative. Chollas Park, Encanto, San Ysidro, National City vote for Obama and Yes on 8 at the same time.
Next, I'll try to build a map. I'll either have to find 2008 precinct definitions or adapt 2006 definitions somehow.
This is how different parts of San Diego County voted on November 4th.
| Neighborhood | Votes for McCain | Votes for Obama | % for Obama | % Yes on Prop 8 |
| Alpine | 4202 | 1939 | 31.6% | 69.4% |
| Ballena | 310 | 133 | 30.0% | 69.4% |
| Bonita | 2748 | 2427 | 46.9% | 62.6% |
| Bonsall | 690 | 358 | 34.2% | 65.9% |
| Borrego Springs | 477 | 518 | 52.1% | 56.3% |
| Bostonia | 3786 | 2755 | 42.1% | 66.3% |
| Boulevard | 341 | 164 | 32.5% | 72.8% |
| Buena | 1845 | 1390 | 43.0% | 62.0% |
| Campo | 414 | 159 | 27.7% | 77.4% |
| Carlsbad | 21637 | 21843 | 50.2% | 51.2% |
| Centre City | 1893 | 4165 | 68.8% | 36.5% |
| Chollas Park | 716 | 4571 | 86.5% | 65.0% |
| Chula Vista | 24675 | 36318 | 59.5% | 62.5% |
| City Heights | 1059 | 3284 | 75.6% | 49.9% |
| Clairemont E | 6240 | 7731 | 55.3% | 51.8% |
| Clairemont N | 4458 | 5993 | 57.3% | 47.7% |
| Clairemont S | 3605 | 5363 | 59.8% | 43.3% |
| Coronado | 4224 | 3095 | 42.3% | 54.8% |
| Crest | 840 | 437 | 34.2% | 69.2% |
| Dehesa | 195 | 132 | 40.4% | 63.5% |
| Del Dios | 2372 | 2151 | 47.6% | 58.1% |
| Del Mar | 812 | 1439 | 63.9% | 32.6% |
| Del Mar Heights | 5604 | 8362 | 59.9% | 40.3% |
| Descanso | 1134 | 474 | 29.5% | 70.1% |
| El Cajon | 13004 | 11324 | 46.5% | 63.9% |
| Elfin Forest | 124 | 104 | 45.6% | 55.3% |
| Encanto E | 2857 | 5790 | 67.0% | 68.7% |
| Encanto W | 1660 | 6356 | 79.3% | 66.5% |
| Encinitas | 9981 | 16538 | 62.4% | 38.3% |
| Escondido | 18635 | 15711 | 45.7% | 64.1% |
| Fairbanks Ranch | 503 | 250 | 33.2% | 58.7% |
| Fallbrook | 8732 | 4816 | 35.5% | 68.1% |
| Felicita Park | 892 | 499 | 35.9% | 62.0% |
| Foothill | 287 | 219 | 43.3% | 60.6% |
| Golden Hill | 413 | 2098 | 83.6% | 30.7% |
| Harbison Canyon | 301 | 147 | 32.8% | 63.2% |
| Harbor | 745 | 643 | 46.3% | 50.1% |
| Helix | 3030 | 2752 | 47.6% | 55.8% |
| Hidden Meadows | 2131 | 1076 | 33.6% | 69.1% |
| Hillcrest | 1481 | 7791 | 84.0% | 16.4% |
| Imperial Beach | 2553 | 3511 | 57.9% | 55.9% |
| Jacumba | 58 | 73 | 55.7% | 65.6% |
| Jamacha | 661 | 373 | 36.1% | 67.0% |
| Jamul | 1963 | 1139 | 36.7% | 66.7% |
| Julian | 789 | 504 | 39.0% | 60.1% |
| La Jolla | 6467 | 8886 | 57.9% | 40.0% |
| La Mesa | 9133 | 11730 | 56.2% | 50.7% |
| La Playa | 1929 | 2004 | 51.0% | 47.9% |
| Lake Morena | 331 | 153 | 31.6% | 71.4% |
| Lake San Marcos | 1515 | 927 | 38.0% | 65.9% |
| Lakeside | 7590 | 3868 | 33.8% | 69.0% |
| Lakeview Flinn | 3491 | 1634 | 31.9% | 70.4% |
| Lemon Grove | 2919 | 4114 | 58.5% | 61.4% |
| Lincoln Acres | 172 | 319 | 65.0% | 65.7% |
| Linda Vista | 2787 | 4488 | 61.7% | 48.9% |
| Loma Portal | 2668 | 3408 | 56.1% | 44.9% |
| Lomas Santa Fe | 231 | 314 | 57.6% | 36.8% |
| Middletown | 1863 | 5030 | 73.0% | 28.1% |
| Midway Old Town | 1498 | 2734 | 64.6% | 40.0% |
| Mira Mesa | 9464 | 11220 | 54.2% | 57.2% |
| Mission Bay | 659 | 1087 | 62.3% | 33.8% |
| Mission Hills | 1286 | 3220 | 71.5% | 27.7% |
| Mission Valley | 1459 | 2966 | 67.0% | 35.1% |
| Montezuma | 2004 | 4526 | 69.3% | 33.8% |
| Montgomery | 296 | 449 | 60.3% | 44.6% |
| National City | 3273 | 6065 | 64.9% | 65.9% |
| Navajo | 6324 | 7238 | 53.4% | 50.5% |
| Nestor | 3488 | 6460 | 64.9% | 65.0% |
| Normal Heights | 3227 | 10063 | 75.7% | 34.4% |
| North Park | 2322 | 11834 | 83.6% | 23.5% |
| Oak Grove | 268 | 188 | 41.2% | 68.1% |
| Ocean Beach | 2217 | 6328 | 74.1% | 26.9% |
| Oceanside | 25385 | 26334 | 50.9% | 59.5% |
| Otay | 2170 | 3655 | 62.7% | 66.4% |
| Pacific Beach | 5390 | 11021 | 67.2% | 31.6% |
| Pala | 57 | 115 | 66.9% | 59.7% |
| Paradise Hills | 3374 | 4808 | 58.8% | 68.4% |
| Pauma Valley | 174 | 205 | 54.1% | 62.9% |
| Pomerado | 8297 | 8830 | 51.6% | 52.1% |
| Potrero | 161 | 140 | 46.5% | 75.1% |
| Poway | 11416 | 7920 | 41.0% | 60.0% |
| Rainbow | 287 | 200 | 41.1% | 65.7% |
| Ramona | 8215 | 3886 | 32.1% | 68.0% |
| Ranchita | 156 | 109 | 41.1% | 64.4% |
| Rancho Bernardo | 9423 | 8625 | 47.8% | 57.4% |
| Rancho El Cajon | 1453 | 637 | 30.5% | 72.3% |
| Rancho Santa Fe | 1652 | 837 | 33.6% | 57.7% |
| Rho Monserate | 432 | 247 | 36.4% | 72.1% |
| Rho Penasquitos | 14972 | 16475 | 52.4% | 52.7% |
| Rincon D Diablo | 2045 | 1188 | 36.7% | 64.4% |
| Rock Springs | 431 | 267 | 38.3% | 65.3% |
| Rolando Redwood | 3380 | 7575 | 69.1% | 51.4% |
| San Carlos | 5361 | 5863 | 52.2% | 51.7% |
| San Marcos | 11446 | 11181 | 49.4% | 59.8% |
| San Ysidro | 1709 | 4217 | 71.2% | 65.4% |
| Santee | 12007 | 7869 | 39.6% | 62.7% |
| Se San Diego E | 339 | 2116 | 86.2% | 65.4% |
| Se San Diego W | 289 | 1838 | 86.4% | 61.0% |
| Serra Mesa | 3130 | 3845 | 55.1% | 52.0% |
| Solana Beach | 2571 | 3445 | 57.3% | 41.1% |
| South Park | 1400 | 5628 | 80.1% | 25.2% |
| Spring Valley | 7093 | 8756 | 55.2% | 64.1% |
| Sweetwater | 405 | 415 | 50.6% | 66.6% |
| Tierrasanta | 4455 | 5437 | 55.0% | 48.2% |
| University N | 3812 | 11904 | 75.7% | 29.7% |
| University S | 2791 | 4063 | 59.3% | 43.8% |
| Valle De Oro | 6877 | 4506 | 39.6% | 63.6% |
| Valley Center | 3869 | 1806 | 31.8% | 70.2% |
| Vista | 11208 | 10934 | 49.4% | 60.8% |
| Vista Acres | 724 | 556 | 43.4% | 61.6% |
| Whispering Palms | 804 | 484 | 37.6% | 56.1% |
| Yaqui Wells | 61 | 64 | 51.2% | 57.3% |
All numbers come from here.
Rural areas are pro-McCain, central San Diego neighborhoods (e.g. Golden Hill, South Park) are heavily pro-Obama. Hillcrest and North Park favor Obama 5 to 1. In Fairbanks Ranch and Rancho Santa Fe, 67% of votes went for McCain, but neighboring Del Mar Heights and Solana Beach vote 57-59% for Obama. (Carmel Valley is probably part of Del Mar Heights in their definition)
Hillcrest is the most liberal, deep East County (Campo, Descanso, Boulevard) is the most conservative. Chollas Park, Encanto, San Ysidro, National City vote for Obama and Yes on 8 at the same time.
Next, I'll try to build a map. I'll either have to find 2008 precinct definitions or adapt 2006 definitions somehow.
Friday, November 7, 2008
San Diego HPI - October '08
City average: 37.9% off the peak
Top tier: 15.5% off the peak
Middle tier: 37.4% off the peak
Bottom tier: 45.9% off the peak
These numbers represent transactions that went into escrow in late August or early September. Stock market began tanking in the last week of September. I expect to see some impact of the stock market crash in November and December data.
Top tier: 15.5% off the peak
Middle tier: 37.4% off the peak
Bottom tier: 45.9% off the peak
These numbers represent transactions that went into escrow in late August or early September. Stock market began tanking in the last week of September. I expect to see some impact of the stock market crash in November and December data.
Wednesday, October 1, 2008
San Diego HPI - September '08
City average: 37.5% off the peak
Top tier: 15.3% off the peak
Middle tier: 37.6% off the peak
Bottom tier: 44.9% off the peak
Note: the chart is rebased to use December '99 = 100%, this way my numbers can be directly compared with Case-Shiller.
Top tier: 15.3% off the peak
Middle tier: 37.6% off the peak
Bottom tier: 44.9% off the peak
Note: the chart is rebased to use December '99 = 100%, this way my numbers can be directly compared with Case-Shiller.
| Month | S&P Case-Shiller | SDHPI |
| January '08 | 197.45 | 198.06 |
| February '08 | 190.34 | 190.64 |
| March '08 | 185.42 | 184.87 |
| April '08 | 180.56 | 179.99 |
| May '08 | 178.03 | 176.52 |
| June '08 | 175.37 | 174.37 |
| July '08 | 172.20 | 171.42 |
| August '08 | 168.25 | |
| September '08 | 164.32 | |
| October '08 | 159.23 |
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