This article covers the San Diego Real Estate Market Update for the month of May 2013. Market Report for the San Diego county real estate region.
May 2013– Market Report and San Diego Real Estate Market Update.
As we enter the Spring Selling season and move into the Summer, the real estate market in San Diego county continues to be constrained by low inventory levels experienced during the first five months in 2013. These inventory constraints have been the norm over the last portion of 2012. As May closes, the available homes for sale listed is at 1.54 months. Some zip codes in San Diego have a handful homes and buyers are frustrated on not being able to find suitable housing.
The following chart is a summary of the overall San Diego Real Estate Market Update for May 2013*:
The average sales price was $ 524,200 and DOM of 46 days were significant improvements, for the selling side, to the levels posted in earlier in the year. The May data is showing an improvement to the sellers on the market. One important number to review is the drastic increase in the closed sales in May to 3290 units sold. The number of new properties for sale listed in May 2013 was 4427 units. The increase in the number of new listings is a good sign for buyers as more options are available in the market. The drastic increase in Pending Units in the month of May to 5464 units is an indication a rapid acceleration towards a stronger seller’s market shown by high demand for homes in the current market.
The available inventory of homes for sale was only 5092 units, with the sales rate of 3290 units sold in May, the available inventory will only support 1.54 months. We are still waiting for an improvement in the inventory levels as the year progresses, and we are seeing the makings for a strong Spring and Summer selling season.
Visit San Diego Homes and Real Estate For Sale for an updated list of homes available in San Diego.
The following chart is a summary the properties listed in May 2013 in San Diego County*:
Distressed sales continue to be a significant portion of homes sold at nearly 16.5 % of total units sold. As the overall percentage of Distressed Sales continues to decline in the future, we will likely see an increase on the average SP as the underwater homeowner exits the market and more regular sales become the norm. We still have a large number of distressed properties in Contingent and Pending. As we clear distressed inventory and with lower foreclosure rates, it should contribute to the recovery and health of the local Real Estate Market.
The way we determine the supply of inventory is by dividing the number of homes on the market in a given month by the number of houses sold that same month.
The number of active properties for sale that are distressed sales is only 5.3%. This metric has remained fairly stable over the last few months, and trending lower from the last reported number, it will be interesting to see if this number changes after the extension of the Mortgage Debt Relief Act at the start of 2013.
The following chart is a summary the distressed properties activity in May 2013 in San Diego County*:
Visit San Diego Bank Owned Real Estate For Sale for an updated list of homes distressed properties available in San Diego.
The National Association of REALTORS (NAR) quantifies a market to be in equilibrium (not a buyer or a seller market) when the supply of homes is at six months. This number is very subjective and really dependent in the region and other factors. Anything above six months is considered as a Buyer’s Market and anything below the six month mark as a Seller’s Market. I feel that three to six months of inventory could be considered as a market in equilibrium. At these levels, while buyers are not in absolute control of the market, if sellers prepare the house well and price it right, they’ll find multiple buyers at the door; however, all things being equal, it will linger on the market and sellers are more willing to provide subsidies and drop prices.
Following are some of my anecdotal observations in the local Market:
• Low existing housing inventory continues to be the trend. Only 1.54 months supply with new listings showing a positive trend for the current Monthly Sales Rate.
• Distressed property sales are still significant at 16.5 % of total sales. This number has stayed fairly consistent over the last three months in 2012 and the start of 2013. This is a healthy sign, as a lower distressed sales number indicates equity Sellers entering the market.
• Home sales prices are rapidly increasing in certain areas. Very important to understand this dynamic if you are ready to buy or sell in those areas.
• Buyer contracts are requiring “non-contingent of appraisal report” addendums. Price inflation is becoming an issue, and certain buyers are getting shut-out from this market.
• Multiple offers in properties in certain areas. Low supply and high demand, some properties with 20 to 30 offer. Buyers are still not finding suitable options in the lower price ranges (less than $ 400K)
• The ratio of new listings to contract is an interesting data point we will monitor. In the month of March 2013, 51.8 % of all the new listings were in contract or sold by the end of month.
• Seller subsidies have disappeared. While buyers used to ask for some sort of assistance (ie – lower price, points paid, closing cost) the buyers must come to the table without any help from the seller.
• High down payments are becoming the norm including many all-cash offers.
• Low interest rates continue to fuel an incredible hot market. Current rates are starting to rise, but still near all time lows. Please review the latest Mortgage Rates Survey at our site.
In conclusion, the San Diego Real Estate Market continues to favor the listing side of the transaction. If you are in the market for a new property, it is imperative to monitor the market for properties that meet your requirements. Understand market dynamics and understand that list price may not accurately indicate final sales price as property valuations are being set by forward demand needs as opposed to recent comparable sales activity.
If you are on the market to sell your property, it may be a good time to review the supply of existing comps and market demand and accurately entertain an offer that maximizes your sales proceeds.
For additional information on this article or more information on the San Diego Real Estate Market Update, please call us at 619.333.0790.
* Market data compiled from Sandicor – Data as of 6.1.13