This article covers the San Diego Real Estate Market Report and Update for the month of August 2014. Market Report for the San Diego county real estate region.
August 2014 – Market Report and San Diego Real Estate Market Update.
Although low supply and tight credit standards are still hurdles to recovery, prices continue to rise in most local areas. Job growth has strengthened lately, but wage growth has not kept pace with the price gains we have seen. Buoyed by stable and continuously lower interest rates, affordability is still historically high yet below its all-time peak. Rising inventory levels will lead to more choices for qualified buyers, but as the summer reaches toward fall, the prospect of more homes coming on the market begins to wane.
New Listings increased 3.7 percent to 4,944. Pending Sales were down 3.6 percent to 3,183. Inventory levels shrank 0.4 percent to 9,458 units. Prices forged onward. The Median Sales Price increased 7.5 percent to $456,995. Days on Market remained flat at 39 days. Absorption rates slowed as Months Supply of Inventory was up 6.5 percent to 3.3 months.
The U.S. Department of Commerce reported that GDP grew at a 4.0 percent annual rate in the second quarter and that the first quarter was less bad than previously thought. Consumer spending in the first quarter rose 2.5 percent, which is encouragingly in tandem with savings rates. Increased consumer spending means more demand for goods and labor; increased savings rates means more resources for down payments. With rates still low, rents still rising and private job growth accelerating, it’s becoming more and more difficult to side with the housing perma-bears.
The following chart is a summary of the overall San Diego Real Estate Market Report and Update for August 2014 (July 2014 Results)*:
The average sales price was $ $576,780 and DOM of 39 days was an increase of 8.7% to the data posted in July 2013 on the Average Sales Price and no change on the DOM. The July 2013 data for the corresponding metrics at $530,743 and DOM of 39 days. For the complete report visit June 2014 Real Estate market Report
The number of new properties for sale listed in July 2014 was 4944 units. The number of new listings in July 2013 was 4766. The higher number of new listings and a lower number of closed transactions in the month of July 2014 should be a healthy sign as more properties are available for buyers. We will have to keep a close watch to this as it could be an indicator towards a weaker Seller’s market.
The available inventory of homes for sale was 9458 units, with the sales rate of 2745 units sold in July the available inventory will only support 3.3 months. We will need to wait until the next month to see if this trend is ongoing as we move into the busy summer sales period.
Visit San Diego Homes and Real Estate for Sale for an updated list of homes available in San Diego.
Some claim that housing has stalled. The truth is that price recovery has simply outpaced comparable wage growth, which is a short-term challenge. With tight inventory and tight credit, further economic gains are needed in order for housing to regain some traction. It appears that some of those gains may have arrived in the form of better-than-expected second quarter growth. For the 12-month period spanning August 2013 through July 2014, Pending Sales in San Diego County were down 9.1 percent overall. The price range with the largest gain in sales was the $1,000,001 to $1,250,000 range, where they increased 18.8 percent.
The overall Median Sales Price was up 13.1 percent to $429,900. The property type with the largest price gain was the Condos – Townhomes segment, where prices increased 15.5 percent to $311,900. 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 Or More range at 68 days.
Market-wide, inventory levels were down 0.4 percent. The property type that lost the least inventory was the Single-Family Homes segment, where it decreased 0.2 percent. That amounts to 3.5 months supply for Single-Family Homes and 3.0 months supply for Condos – Townhomes.
Distressed sales continue to trend lower to nearly 14% of total units sold. This trend is a positive for the overall health of the Real Estate Market in San Diego. Sellers are being encouraged to place their properties on the market due to the increase of home values and not because due to their need to liquidate the property due to a distressed situation. We should continue see this trend continue unless we see a significant erosion of the overall economy which could lead to higher interest rates and lower demand for housing.
Following is a comparison of the overall San Diego Market Update and Lender Mediated listings:
New Listings in San Diego County increased 3.7 percent to 4,944
• Traditional New Listings increased 7.0 percent to 4,308
• Lender-mediated New Listings decreased 13.8 percent to 636
• Share of New Listings that were lender-mediated fell to 12.9 percent
Closed Sales were down 23.4 percent to 2,745
• Traditional Closed Sales were down 16.8 percent to 2,390
• Lender-mediated Closed Sales were down 50.1 percent to 355
• Share of Closed Sales that were lender-mediated fell to 12.9 percent
The overall Median Sales Price rose 7.5 percent to $456,995
• The traditional Median Sales Price rose 4.0 percent to $468,000
• The lender-mediated Median Sales Price rose 13.4 percent to $380,000
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:
• More stable Real Estate Market Update in San Diego for existing housing inventory. Only 3.3 months’ supply with new listings showing a mixed trend for the current Monthly Sales Rate.
• Distressed property continues to trend lower towards 14% of total sales. This is a healthy sign, as a lower distressed sales number indicates equity Sellers entering the market.
• Home sales prices have stopped their upward trend and reaching a near term peak in other areas. Very important to understand this dynamic if you are ready to buy or sell in those areas.
• Rapid Price inflation has slowed down, and certain buyers are now able find suitable housing in this market.
• Multiple offers still on the lower price range still a challenge.
• Seller subsidies are starting to come back in the higher price points.
• High down payments are becoming the norm including many all-cash offers.
• Higher interest rates have slowed the overall market. Current rates are still below historical averages. Please review the latest Mortgage Rates Survey at our site.
In conclusion, the San Diego Real Estate Market continues to favor the sell side of the transaction, however it is trending to a more stable market driven by several factors in the 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
San Diego Homes For Sale and Real Estate Information
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