San Diego Real Estate Update: Numbers Slightly Down

Lower Inventory: Number of detached homes for sale countywide has been steadily decreasing over the last 12 months. The last couple months have gone up slightly, but there is a well documented trend that the months of July and August are always high inventory months. In comparison to this usual seasonal variation, we could say that inventory continues to be lower than expected. Search all San Diego homes for sale.

View the current Market Velocity chart displaying the above stats.

Contingent Short-sales: A new category: In reviewing the above data, we need to take into account that our statistics have changed (starting with June numbers) because our data categorization has changed. We used to just have 3 categories: Active (for sale homes), pending (in escrow homes) and sold homes. We now have a new status category called “contingent” in response to the growing number of short-sales on market. A “contingent” home is a short-sale in which the seller has accepted an offer, but the bank is reviewing the offer and has not approved it. The bank needs to approve any offer on a short-sale before they can open escrow.

Currently, contingent homes appear to make up roughly about 25-35% of our inventory! In the past, some agents left these as active and some put them pending. It is hard for us to fully compare the new data to the old data because of this. The market velocity chart is grouping the active and contingent homes together. This does mean that the new way of keeping data will show more listings as active inventory and less listings (for the time being) as pending.

My interpretation then, is that inventory has actually gone down during the last couple months based on the different way that our data is categorized. i.e., if we were still calculating using the previous methods, we would see less inventory and more pending homes. Although this makes it hard to compare current to previous data, the new category was a necessity and is very useful to those performing a home search.

Government Incentives: This coupon expires when?

1. $8000 federal tax credit to “first-time buyers” (or anyone who hasn’t owned in 3+ years)
2. $10,000 CA state tax credit for purchasing a new home (split up over 3 years)

The federal tax credit is good for any homes closed prior to November 30th. There is talk about extending and modifying this credit, but we have nothing more than hearsay to report on this matter.

Home Loan Rates Still Low: First off, yes there is plenty of financing available to qualified homebuyers. Home loan rates have bounced from upper 4’s to upper 5’s in rather volatile fashion. Currently, we are seeing quotes in the 5 – 5.5% range for the most part. This remains a low-point for home loan rates - it is truly an unprecedented opportunity for home buyers to lock in one of the best rates in history.

How Long Will Rates Stay Low?: The big talk from economists these days is looming inflation (or stagflation) in response to the mass printing of new money as a part of the government stimulus package. With inflation comes higher rates. Economists are split as to when and how high rates will go, but almost all economists agree that we will see a significant rise in the next few years. Some of you will remember home loan rates in the high teens during the late 70’s and 80’s.

View historical charts on Home Loan Rates: 30-year fixed rates from 1971-2006 and home loan rates from 1991-2008.

Market stratification - luxury vs. lower-end: Luxury prices continue to drop, while low-end homes appear to have hit bottom. (see last quarter’s notes so we don’t bore you with repetition).

View a couple examples of this market stratification here (sold data for the last 6 months) as of 8/28/09:

Mission Hills homes under $800k
Active: 28 Cont: 5 Pending: 13 Sold: 39

Mission Hills homes over $1.2mil
Active: 38 Cont: 1 Pending: 2 Sold: 2

Clairemont homes under $400k
Active: 3 Cont: 16 Pending: 21 Sold: 81

Clairemont homes over $600k
Active: 14 Cont: 1 Pending: 4 Sold: 13

Poway homes under $500k
Active: 14 Cont: 20 Pending: 49 Sold: 103

Poway homes over $1mil
Active: 63 Cont: 2 Pending: 12 Sold: 32

In the lower end of each market, you will see less actives and many more sales in the last 6 months. In the higher end of each market, you will see more actives, and relatively few sales. Also, if you look at a luxury market like Mission Hills as a whole and compare it to Clairemont, you will see that Clairemont is a much hotter market as a whole because prices overall are lower and more affordable. Contact me to get a list of San Diego homes in your neighborhood at my website.

The best deal in town: Luxury properties: Very simply put, there are more great choices due to higher inventory, room for negotiation when purchasing, and better loan rates (conforming loan limits are up). If you've been thinking of a move-up, now is the time to get a great deal on the home of your dreams.

What should I do?: I don’t know… Buying or selling a home will always depends on your current situation, your goals and your whims, just as much as the market’s economic indicators. I am happy to offer free consultation to you, your friends and family whenever requested. My contact info is below.

Adam Pascu
Team 73 Degrees
Keller Williams Realty
adampascu.com, 858.761.1707