San Diego Real Estate Trends

Bob Weurding, Broker Associate
Keller Williams Realty

It is so frustrating to be listening to, or reading the news and know you are only getting half the story. There seems to be a lot of that happening in the news these days. Let me give you an example: Existing home sales for the nation in 2006 totaled 6.48 million and are expected to only be 6.04 million in 2007. This is down 6.8% from 2006 and will be the lowest total since 2002. All true, but the part of the story that is missing is the fact that 2006 was the 4th best year since 1941 for real estate!

Housing starts are down for 2007, and the number of defaulted sub prime mortgages that are behind 60+ days has doubled from the 8.3% in 2006. Again all true, however 2007 is on track to be the 6th best year in history! Applications for home loans has risen 8.1% for three consecutive weeks and the Mortgage Index rose to 656.5, up 18% from last year.

When the media quotes national averages, or for that matter county totals, they rarely tell the story in our local marketplace. NAR (National Association of Realtors) is expecting the real estate market to turn around and head back up in 2008. They are also expecting the nationwide median price on existing homes to equal $223,600, or up 1.96% from $219,300 in 2007. First of all, when was the last time you saw a SFR property for less than $400,000, let alone $223,600?

With all of this having been said, let’s see how our local I15 market is shaping up. The number of home sales in the county are off by 14.8% while the “average” sales price is up 2.78%. Poway is having the hardest time in 2007. The number of sales are off by 10.75% and the average sales price is down 11.4% during the first seven months of the year when compared to the same period in 2006.

RB 92127 is not only experiencing an increase in the average sales price of 8.99%, they are the only zip code in our market to also have an increase (12.95%) in the total number of sales. RB 92128 has seen a very small (.08%) increase in average sales price, however the number of sales were down by 7.620%. PQ rounds out our local market place with a slight decrease in both average sales price (1.44%) and the number of sales (2.65%).

The point is, the next time you read or hear about the national, or county real estate statistics, they may or may not reflect your neighborhood. For more accurate information contact a Realtor who keeps track of the sales in your neighborhood, it might not be as bad as you think.

Source: Sandicor, MLS, and Dataquick

Bob Weurding, Broker Associate
Team Weurding Realty

Very few people would take exception to the notion that San Diego County real estate sales have slowed. Area real estate agents took 101 fewer listings in June when compared to May, yet active housing inventory throughout the county increased by 507 listings in June.

It was my original intent to focus on how the home prices have shifted over this past year. This could be done by showing the percentages of inventory in the different price ranges and then comparing the two years. It turned out exactly as I had expected. The percentage of inventory in the upper price ranges was declining, while the percentage of the total inventory in the lower price ranges was increasing, indicating a downward shift in prices. Before the sellers, or for that matter the buyers, get too excited, the shift has been somewhat gradual and seems to be affecting the upper end of the market the most.

The only exception to this trend was RB 92127 where 87.5% of their total housing inventory is priced over $600K, up from 84.9% at this time last year. San Diego county as a whole, saw the over S600K inventory drop by roughly 5.5% , while the $200K - $400K price range actually increased by the same 5.5%. The balance of the market saw very little shift in numbers.

What turned out to be far more dramatic was the shift in housing prices over the past five years. Check out the attached chart and you will notice the S200K - $400K price range made up a large share of the market in 2002, while today there are very few homes in this price range. The $400K- $600K price point is not consistent, with some zip codes increasing in numbers over the past five years and others actually going down. But don’t be fooled: RB 92127, RB 92128, and PQ actually jumped over this price point and created a large increase in the over $600K price range.

If a person compares the prices in 2002 with today’s prices, it becomes abundantly clear why fewer people can afford to purchase a home today without some form of creative financing. We are now discovering the problem with that. Short sales and foreclosures are increasing at an alarming rate.

Source: Sandicor, MLS, and Dataquick

Some months the numbers and statistics just seem to jump off the page. Perhaps they dispute a belief that has been presented as fact in the media. Or, maybe they just reassure the buyers and sellers of real estate, that it is still the single best investment a person can make. Unfortunately April was not the case because the figures were all over the board and didn’t seem to support any specific trend.

For example, in some cases the average sales price of homes for the first four months of 2007 were up from the same period in 2006. Specifically Rancho Bernardo 92127 and 92128 were up and Poway and Rancho Penasquitos were down. Rancho Bernardo 92127 was the only zip code on the I-15 that posted a gain from 2006 in the number of sales for the first four months of the year. (Up 16%)

Attached home sales have followed basically the same trend, with the total number of sales down from 2006. The average and median sales price has also shown a decrease from 2006 prices. The only exception from this trend is Poway where the average sales price actually went up by nearly $5,000.

Following months of growing inventory, it appears that is about to change due to the sharp decrease in the number of new listings being taken. For example, last year in the first four months there were 2,030 new SFR listings taken along the I-15 corridor and this year that number was down by 374 homes. The same was true for attached homes in our marketplace. This year we have taken 211 less new listings compared to the 707 listings taken during the same timeframe in 2006.

If this should continue it could have a significant impact on the business principle of “Supply & Demand.”

Source: Sandicor, MLS, and Dataquick

Team Weurding Realty 

The subject of my monthly article is titled “Real Estate Trends.” So I ask, who do you believe when the different surveys seem to be in conflict with one another? For example, the National Association of Realtors reported last month that the “median” price of an existing home nationwide fell by 3.1% in 2006. On the other hand, the federal agency OFHEO (The Office of Federal Housing Enterprise Oversight) reported that home values rose by an average 5.9% last year.
 

To best answer that question you have to know what each survey is measuring. The various surveys tend to focus on different aspects of the market, and for the most part report on the median price —the mid point among all homes sold in a given period. This has a serious limitation when trying to report on sales in an area like Poway or RB 92127. It all depends on which segment of the market is selling that month. For example, it doesn’t take many million dollar sales to skew the numbers upward, especially when “average” sales price comes into play.
 

Taking a closer look at 92127, we notice that almost 89% of the housing inventory is priced over $600K, and yet only 24% of that segment is in escrow. That leaves around 11% of the inventory under $600K in price, with approximately 51% of these homes in escrow. The same scenario is taking place throughout our 1-15 marketplace.
 

Nearly 60% of the Poway homes are priced over $600K, yet less than 1 in 5 of that segment are in escrow. Only 3.6% of the Poway SFR listings are priced under $300K, with more than 55% of those in escrow. Sixteen percent of Poway ’s inventory is priced in the $400K - $500K range, and 20% are between $500K - $600K. As the price goes up the percent in escrow goes down.
 

RB 92128 and PQ also have the bulk of their housing inventory priced over $600K, but because there are fewer homes that exceed the $1 million price level, the percentage of homes sold is more evenly distributed. Also, both of these zip codes have managed an overall higher percentage of homes under contract or in escrow. For example, PQ has nearly 41 % of their active listings in escrow compared to 27% for Poway & RB 92127.
 

Getting back to my original question on who to believe: I tend to deal with actual numbers. The actual number of listings, the number of sold listings, and the actual sales price, all hard to dispute. I gather my information primarily from the Multiple Listing Service and the tax rolls but limit my search to only SFR listings unless otherwise stated. In any case, whatever the result of a survey it doesn’t automatically mean all homes are going to be impacted the same. A neighborhood can be in a declining market, and yet any given property can and often does break the trend.

Source: Sandicor, MLS, and Dataquick

Bob Weurding, Broker Associate
Team Weurding Realty

Last month I gave you a complete breakdown on the real estate market for 2006, now let’s take a look at how 2007 is getting started. It is comforting to know that some things never change, the folks that jumped out of the market over the holidays are back.

Real estate inventory in the county jumped up by 6% in January and at the same time the number of homes in escrow went up by 8.3%. What makes this most interesting is there were 392 fewer sales in January when compared to December of 2006.

Poway agents took 80 new SFR detached listings in January compared to only 30 in December, and sold roughly the same number of homes in both months (21). This may shock you, but the average sales price was up from $756,608 to $834,752. Who said we were in a down market? RB 92127 took 33 more new listings, and sold 13 less homes in January when compared to December. Likewise, RB 92 128 had 83 new listings and sold 31 SFR homes in January. This compares to 27 new listings and 42 sales in December.

Rancho Penasquitos agents added 44 more new listings and sold I5 fewer homes in January then they did in December. As it turns out, PQ was the only zip code in our I- 15 marketplace to show a slight decrease in average sales price over these two months. Poway was up 10.3%, RB 92127 was up 23.4%, RB 92128 was up 6%, and as stated, PQ was down just under 1%.

It is still early and the heart of our real estate season is still a few months away. However, from looking at the chart you can see the bulk of our homes are priced over $600,000 with 61% of RB 92127’s homes exceeding a million dollars in price. This is bound to impact many of our potential buyers.

Source: Sandicor, MLS, and Dataquick