This article covers the San Diego Real Estate Market Report and Update for the month of October 2014. Market Report for the San Diego county real estate region.
October 2014 – San Diego Real Estate Market Report and ] Real Estate Market Update.
Markets across the nation seem to be back on the recovery track after a brief pause. One of the more encouraging aspects of this renewed recovery is that new construction of single-family homes reached six-year highs in August, according to the U.S. Commerce Department. Consumers are also finding more listings in their search results than they have in years. Inventory is rising in many neighborhoods as higher prices have motivated more sellers to list.
For the San Diego Real Estate Market Report and update, compared to 2013 metrics for the same time frame, new Listings decreased 0.2 percent to 4,132. Pending Sales were up 4.2 percent to 2,928. Inventory levels shrank 5.4 percent to 9,389 units. Prices forged onward. The Median Sales Price increased 6.3 percent to $455,000. Days on Market increased 4.9 percent to 43 days. Absorption rates slowed as Months Supply of Inventory was up 3.1 percent to 3.3 months.
The departure of investors from the scene should benefit first-time homebuyers, but student debt and sluggish wage growth have slowed that transition. The economy is growing, but it’s growing at a slower pace than desired. Thankfully, inflation remains tame, partly enabling the Federal Reserve to keep rates low for longer, contrary to the forecasts of most economists.
Of course there is no crystal ball for real estate, but all signs point to a market that is stabilizing and still in recovery. Indicators point to a more “normal” housing market moving forward, where sellers and buyers are on more equal footing.
The following chart is a summary of the overall San Diego Real Estate Market Report and Update for October 2014 (September 2014 Results)*:
The average sales price was $ $592,488 and DOM of 43 days was an increase of 7.2% to the data posted in September 2013 on the Average Sales Price and an increase of 4.9% on the DOM. The September 2013 data for the corresponding metrics at $552,683 and DOM of 41 days.
The number of new properties for sale listed in September 2014 was 4132 units. The number of new listings in September 2013 was 4,142. The nearly flat change to new listings and a significant decrease in closed units (-7.5%) of September 2014 should be a healthy sign as more properties are available for buyers. The market continues to soften for Sellers and we are seeing greater number of properties available for Buyers.
Two very important metrics to consider is the year-over-year median price change and the Pct. Of Orig. Price received. Last year (2013) the Median Price Increases we were experiencing at the beginning of the fourth quarter of 2013 was averaging nearly 15% (October 2013 recorded a 16.9% increase). The Median price increase in September 2014 was a 6.3% increase. The Pct. Of Orig. Price Received decreased from 97.8% in September 2013 to 95.7%.
The available inventory of homes for sale was 9389 units, with the sales rate of 2640 units sold in July the available inventory will only support 3.3 months. We have been maintaining the 3.3 month inventory for some time now. This at the moment appears to be our new norm. We will need to continue monitor this closely, as we feel a shift on our local market is beginning to occur. Sellers are beginning to see less action on some listings, and pricing strategies are more important now than in the recent past to obtain optimum results in the sell or purchase of properties.
As recovery returns to most local markets after a brief soft patch, the Commerce Department released data showing new home sales surging to a six-year high. For the 12-month period spanning October 2013 through September 2014, Pending Sales in San Diego County were down 9.1 percent overall. The price range with the largest gain in sales was the $500,001 to $750,000 range, where they increased 12.6 percent.
The overall Median Sales Price was up 11.5 percent to $435,000. The property type with the largest price gain was the Condos – Townhomes segment, where prices increased 13.9 percent to $318,900. The price range that tended to sell the quickest was the $500,001 to $750,000 range at 37 days; the price range that tended to sell the slowest was the $1,250,001 and Above range at 67 days.
Market-wide, inventory levels were down 5.4 percent. The property type that lost the least inventory was the Condos – Townhomes segment, where it decreased 5.2 percent. That amounts to 3.5 months supply for Single-Family Homes and 3.0 months supply for Condos – Townhomes.
Interest rates remain low. Rates are still very low, in fact they are the lowest in years (hovering around 4.1% this week on a 30 year fixed mortgage). Many factors contribute to this, including geopolitical instability, but the fact is that buyers can still take advantage of some great mortgage products. If inventory continues to increase this should stimulate sales.
Visit San Diego Homes and Real Estate for Sale for an updated list of homes available in San Diego.
Following is a comparison of the overall San Diego Market Update and Lender Mediated listings:
New Listings in San Diego County decreased 0.2 percent to 4,132
- Traditional New Listings increased 0.6 percent to 3,541
- Lender-mediated New Listings decreased 4.8 percent to 591
- Share of New Listings that were lender-mediated fell to 14.3 percent
Closed Sales were down 7.5 percent to 2,640
- Traditional Closed Sales were down 2.9 percent to 2,287
- Lender-mediated Closed Sales were down 29.4 percent to 353
- Share of Closed Sales that were lender-mediated fell to 13.4 percent
The overall Median Sales Price rose 6.3 percent to $455,000
- The traditional Median Sales Price rose 5.6 percent to $470,000
- The lender-mediated Median Sales Price rose 7.4 percent to $375,000
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:
- We will see price gains soften over the next quarter. Sellers who are motivated should price ahead of the market and likely 5%-10% below the Active inventory.
- We are experiencing a shift for the first time since 2008. Agents and Consumers who have only seen a Sellers market need to learn the dynamics and expectations of a balanced market
- Values have risen because of pent up demand and a 8-10% average appreciation will be seen for the 2014 year even with the shifting towards a balanced market
- Buyers may be able to negotiate more aggressively for price reductions or more favorable terms while the market is shifting
- All indicators are that our market is “normalizing” which is much healthier and sustainable than the 20% year over year increases in value we experienced in 2012 and 2013
- There is a sense of complacency as a market shifts to being more balanced. The sense of urgency, except in the most motivated clients, dissolves.
- Sellers who are also buying replacement properties will find that this market is much more suitable for them. Negotiating contingent offers is much easier when the market is balanced
In conclusion, the San Diego Real Estate Market continues to slightly favor the sell side of the transaction, however it is rapidly trending to a more stable market driven by several factors in the Global, US and Local economy. 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.
Kouren Jouldjian, CDPE
REALTOR® / Broker Associate
CalBRE License 01487596 / Broker CalBBRE Lic: 01295699
San Diego Homes For Sale and Real Estate Information
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