Trends in San Diego Home Sales
Wednesday, November 19th, 2008
San Diego Homes
The headline in the San Diego Union Tribune, Business Section, for Tuesday, November 18, 2008 reads “S.D. home prices fall, but sales are brisk” . Roger Showley does a nice job laying out the facts on recent price changes and sales numbers. If you follow this column monthly, you may notice something else … like maybe a trend or two? http://www3.signonsandiego.com/stories/2008/nov/18/1b18housing61010-sd-home-prices-fall-sales-are-bri/
Take a look inside the numbers … resale houses are selling 101% per month higher than they did a year ago! That’s right, number of resale houses selling each month has doubled in the last 12 months. And, resale condos are selling even faster, an increase of 109% per month over October of 2007! Even with a “tough mortgage market” and an unsettled financial market, San Diego residents are rushing to buy homes.
Why would they do that? Well, the biggest reason is pricing has fallen to a level not seen in the last six years! Affordability is up! Interest rates are still extremely affordable. This gives buyers a great opportunity to purchase more house for a smaller monthly payment.
But this scenario may not last too long. Another interesting fact was revealed in a San Diego Daily Transcript article the same morning, by Jen Lebron-Kuhney. Please see: “Notice of default, trustees sale decrease for second month in a row, NODs down 64% from peak” at: http://www.sddt.com/News/article.cfm?SourceCode=20081117cyc
Foreclosures have fallen from over 2,000 per month in July, to 1,293 in October. And, Notices of Default have fallen from 3,600 per month in April, to 1,269 in October. These are significant changes! With monthly sales of existing homes and condos totaling over 3,280 in October and over 49% of those sales coming from foreclosed product, we are now seeing more foreclosed homes being sold than added to the inventory of available homes for sale!
This fact is also verified by the fall in the number of homes in San Diego County being offered for sale. The number of homes offered for sale in June was 19,592. The number of homes offered for sale in October was 16,834. That is 14% decrease in available inventory in 4 months! And, if you compare year over year, (20,444 in October 2007) you find the decrease is even greater at 17.7% !
While the median pricing of resale homes continues to fall each month, the rate of decline has dramatically decreased. Couple that fact with anecdotal evidence from real estate brokers and sales agents about the increase in the number of offers and offers that exceed the asking price on foreclosed homes for sale, you get a picture of a real estate market that is making a turn.
The trends I see are an increasing rate of sales of existing homes and condos. A trend toward equilibrium on pricing. A trend on decreasing inventory overall and notably, a trend on reducing the amount of foreclosed homes available for resale. I see a trend in buyers who are more “qualified” to buy a home and more financially stable than the mortgage market they must negotiate. These trends tell me a turn in the perceived real estate market for San Diego County is about to happen. I say “perceived”, because I think the smart buyers have already figured out the market change and are buying today. When the headlines proclaim “The Real Estate Market has Turned!”, the smart buyers will have already purchased their new homes.
