Real Estate Trends January 2008
Bob Weurding, Broker Associate
Team Weurding Realty
Before going into the specifics of the 2007 San Diego real estate market, we need to be clear on a few things so that what I’m about to tell you will make sense. First, as previously stated, 2006 was a record setting year (the fourth highest year in recorded history) so, after several years of rising prices, it was inevitable that at some point things would have to adjust. Second, the media has been doing an excellent job of conditioning the public to expect only the worst. And third, falling prices are “not” the issue! The declining number of sales is the main cause of our current real estate problem in most parts of our county, and for that matter, the United States . Let me explain!! As a reminder, these numbers only reflect the sale of SFR detached homes sold via the Multiple Listing Service. While attached homes are not included in the totals, those numbers seem to be saying the same thing. Because the data I need to calculate the median sales price throughout the county is not available to me at this time, I used the data that was available and calculated the “Average Sales Price.” In 2007 the MLS reported 15,421 sales of detached SFR homes at a total sales price of $11,404,755,622. That averages $739,560 per sale. In 2006 we sold 19,047 SFR homes. If we used the average sales price that was achieved in 2007, that would equal $14,086,400,384, a significant increase over the total dollar value for 2006. All we needed were more sales. The number of sales was down from 2006 in Poway by 17%, RB92128 was off 12.8%, and PQ92129 had slipped 13.1%. RB92127 actually had 7.4% more sales than in 2006 and at a 3.5% higher median sales price. While there were generally significant decreases in the numbers of sales, the median selling price held its own throughout our local market. Poway was only down 1.95%, RB92128 was off 3.12%, and PQ92129 only slipped 1.07%. Given that we are comparing to 2006, which was a record setting year, that is really not so bad. The same sequence of events took place within the attached home category. San Diego County Realtors sold 8,659 units in 2007 compared to 10,225 in 2006. That represents an approximate 15% reduction in the number of sales. Poway ’s sales dropped 23.8%, from 67 in 2006 to 51 this past year. RB92128 sold 34 fewer units in 2007, PQ92129 went from 182 in 2006 to 152 in 2007 for a 16.48% decline. Once again RB92127 stands alone by selling the same number of units (125) in each of the two past years. Again, prices did not seem to suffer like one would expect based on the drop in demand. Poway was only off 3.6%, RB92127 dropped 5.6%, RB92128 was down 6.85% and PQ92129 maintained the same median price as recorded in 2006 ($350,000). While I’m certain not every seller reading this will agree with the numbers, however they are based on all MLS transactions that were recorded over the two year period. I’m confident that they represent the market far more accurately than some of the other sources available. Do I believe we have a problem in the real estate industry? Yes, we need to correct the serious problem that was created by all of those sub-prime loans that are now defaulting in record numbers. Perhaps, many of them should never have been written in the first place. The reason they were so popular was because it was the “only” way many buyers could afford the higher prices that real estate had reached. I believe if we can survive the “short sale” dilemma and if the interest rates and the job economy remain strong, we should see the number of sales start to increase by the end of the year, perhaps as early as the fall. Source: Sandicor, MLS, and Dataquick
Team Weurding Realty
Before going into the specifics of the 2007 San Diego real estate market, we need to be clear on a few things so that what I’m about to tell you will make sense. First, as previously stated, 2006 was a record setting year (the fourth highest year in recorded history) so, after several years of rising prices, it was inevitable that at some point things would have to adjust. Second, the media has been doing an excellent job of conditioning the public to expect only the worst. And third, falling prices are “not” the issue! The declining number of sales is the main cause of our current real estate problem in most parts of our county, and for that matter, the United States . Let me explain!! As a reminder, these numbers only reflect the sale of SFR detached homes sold via the Multiple Listing Service. While attached homes are not included in the totals, those numbers seem to be saying the same thing. Because the data I need to calculate the median sales price throughout the county is not available to me at this time, I used the data that was available and calculated the “Average Sales Price.” In 2007 the MLS reported 15,421 sales of detached SFR homes at a total sales price of $11,404,755,622. That averages $739,560 per sale. In 2006 we sold 19,047 SFR homes. If we used the average sales price that was achieved in 2007, that would equal $14,086,400,384, a significant increase over the total dollar value for 2006. All we needed were more sales. The number of sales was down from 2006 in Poway by 17%, RB92128 was off 12.8%, and PQ92129 had slipped 13.1%. RB92127 actually had 7.4% more sales than in 2006 and at a 3.5% higher median sales price. While there were generally significant decreases in the numbers of sales, the median selling price held its own throughout our local market. Poway was only down 1.95%, RB92128 was off 3.12%, and PQ92129 only slipped 1.07%. Given that we are comparing to 2006, which was a record setting year, that is really not so bad. The same sequence of events took place within the attached home category. San Diego County Realtors sold 8,659 units in 2007 compared to 10,225 in 2006. That represents an approximate 15% reduction in the number of sales. Poway ’s sales dropped 23.8%, from 67 in 2006 to 51 this past year. RB92128 sold 34 fewer units in 2007, PQ92129 went from 182 in 2006 to 152 in 2007 for a 16.48% decline. Once again RB92127 stands alone by selling the same number of units (125) in each of the two past years. Again, prices did not seem to suffer like one would expect based on the drop in demand. Poway was only off 3.6%, RB92127 dropped 5.6%, RB92128 was down 6.85% and PQ92129 maintained the same median price as recorded in 2006 ($350,000). While I’m certain not every seller reading this will agree with the numbers, however they are based on all MLS transactions that were recorded over the two year period. I’m confident that they represent the market far more accurately than some of the other sources available. Do I believe we have a problem in the real estate industry? Yes, we need to correct the serious problem that was created by all of those sub-prime loans that are now defaulting in record numbers. Perhaps, many of them should never have been written in the first place. The reason they were so popular was because it was the “only” way many buyers could afford the higher prices that real estate had reached. I believe if we can survive the “short sale” dilemma and if the interest rates and the job economy remain strong, we should see the number of sales start to increase by the end of the year, perhaps as early as the fall. Source: Sandicor, MLS, and Dataquick
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