San Diego Real Estate Trends

For the past few years, those of us who make our living in the real estate industry have been spoiled. Other than perhaps a shortage of inventory at times, homes were selling as fast as they came on the market. To the delight of the sellers, and in spite of the constant increases in price, there seemed to be no shortage of buyers. Qualified to purchase is another question, the answer of which is one of the primary causes for today’s housing slump.
The sheer numbers of short sales and foreclosures that have resulted from some rather dubious lending practices is certainly one of the main reasons that we are in the mess that we are today. So much so that it has become increasingly more difficult to find something positive to write about when it comes to real estate. While I’m not ready to say that we are out of the woods, and that the market has turned around, there are a couple of positive signs we need to watch.

In business school, we learned about the principle of supply and demand. If the demand decreases, and the supply increases, prices will almost certainly go down. While that may be the norm, it hasn’t always played out that way in our San Diego real estate market. I believe that in order to determine the status of a real estate market one must look at several factors and to avoid the overused statistics of average and median sales price, unless those numbers are supported by other factors that make the picture complete. A colleague of mine, Rick Hoffman, President and COO with Coldwell Banker Residential, wrote an article on this same subject in the Sunday May I I1h edition of the San Diego Union-Tribune. I further believe that too many “experts” tend to generalize or provide a macro look when reporting statistics instead of focusing on a specific marketplace. Just within the County there are actually dozens of separate marketplaces all yielding their individual result.

With that said, and looking for something positive to report on, I did discover a trend that goes all the way back to December of last year. In December of 2007, only 13.2% of the available SFR inventory was in escrow. That number has been increasing every month, and in April was at 22.2%. According to the Sandicor MLS, the average number of days on the market for those homes in December was 83 days. The average time on the market has been going down every month to where in April it was 73.8 days. Normally, I don’t like to quote DOM because the number is so often manipulated by some to create a more favorable image for their listing. Even given this fact, there is still a trend that is showing up.

And lastly, based on my own personal experience in the business during these months, it appears that there are currently still no shortages of buyers, because we have been encountering multiple offers on nearly every offer that we have written in the past 4 months. Qualified or motivated to actually purchase, that is still another question.

Source: Sandicor, MLS, and Dataquick