by Calculated Risk on 1/02/2006 03:53:00 PM

My friend, Ramsey, has started calling Feb 1, 2006 G.R.E.B.B. DAY (Greenspan real estate bubble bursting day). Very funny.

Although I think the slowdown will be gradual, Ramsey provided the following data today on the San Diego housing market:

San Diego real estate update:

December 05 closings 2,107
That is 36.2% less than YTY Dec 04 of 3,300
That is 12.7% less than sequential Nov 05 of 2,414

2005 total closings 39,950
2004 total closings 42,809

December 05 avg sold price $633,223
That is 9.2% higher than YTY Dec 04 of $579,749
That is 1.3% higher than sequential Nov 05 of $625,172

December 05 closings averaged 63 days on market.
That is 16.6% longer than YTY Dec 04 of 54 days.
That is 6.8% longer than sequential Nov 05 of 59 days.
Avg days on market for all 2005 closings was 52 days.
Avg days on market for all 2004 closings was 33 days.

32.9% of Dec 05 sales were condos.
35.1% of all 2005 sales were condos.

December 05 pending sales 1,775
Jan 06 closings, based on Dec 05 pendings, are going to fall off the cliff unless sales miraculously pick up right now.

For sale inventory peaked at just over 15,000 early December 05 and dropped back to 13,876 on Dec 31, 05 due to the holidays. We should see a number of listings coming back on the market soon. How fast this inventory gets absorbed is going to tell us the health of the market.

I've felt the housing slowdown would start with rising inventories, followed by falling transaction volumes, and then falling prices. Inventories for both new and existing homes have been rising for months. Now the second phase may be starting: from Ramsey's comparison of Dec 2005 to Dec 2004 for San Diego, transaction volumes dropped significantly (36%).

It is no surprise that inventories fell in December. That happens every year as sellers take their houses off the market during the holidays. When the December existing homes numbers are released, I expect inventories to fall 10% to 20% from 2,903,000 in November (in 2004, inventories dropped 13% from November to December). That doesn't mean the market is recovering - it is just part of the seasonal pattern.