San Diego Real Estate Market

San Diego County Residential Real Estate Market Analysis: ^3nd Quarter 2011 (Part2)

By Mark A. Melikian California Certified Residential Appraiser appraisals@san.rr.com P.O. Box 3051 Del Mar, California 92014 858-793-9339

Market Overview: The mean sold price for a housing unit in San Diego County peaked in 2007 at $621,675. The mean sold price in 2009 decreased to a low of $385,754, a 37.9 percent decrease from the market peak in 2007. *In 2011, the projected mean sold price is $415,743, which would represent a 7.8 percent increase from the 2009 mean sold price and a 33.1 percent decrease from the market peak in 2007 (see figure 3).

Figure 3

Market Overview: The mean number of days a property was on the market in San Diego County reached a low of 29 in 2004. *The projection for 2011 shows the mean number of days on market to be at 78, a new high for the given time frame (see figure 4).

Figure 4

Detached Housing Market Specifics – 3^rd Quarter 2010 compared with 3^rd Quarter 2011: Detached home sales data for the 3^rd quarter of 2011 shows the highest number of sales were in the $200,000-$300,000 price range. This reflects a shift from the 3^rd quarter of 2010, when the highest number of sales were in the $300,000-$400,000 price range (see figure 5).

Figure 5

Attached Housing Market Specifics – 3^rd Quarter 2010 compared with 3^rd Quarter 2011: Attached home sales data for the 3^rd quarter of 2011 shows the highest number of sales were in the under $200,000 price range. This is consistent with the 3^rd quarter of 2010, when the highest number of sales were in the same under $200,000 price range (see figure 6).

Figure 6

Detached and Attached Housing Market Specifics – 3^rd Quarter 2011 Housing Supply: Normal residential real estate markets typically have a six to seven month supply of housing inventory. Based on 3^rd quarter 2011 absorption rates, current supply levels for detached properties are at, or below, normal market levels up to the $1,000,000 plus price ranges. Current supply levels for attached properties are at, or below, normal market levels up to the $800,000 plus price ranges (see figure 7).

Figure 7

Comments and Outlook: Based on the first three quarters of the year, projections for the 2011 San Diego County housing market show sales volume to decrease, days on market to increase and prices to reflect a modest decrease from those in 2010. The highest volume of sales activity for attached units is projected in the under $200,000 price range. The highest volume of sales activity for detached units is projected in the $300,000 and below price range (entry-level housing). For detached housing this reflects a downward shift from past quarters.

Historical data demonstrates that the mean sales price of housing has found a balance near the $400,000 price range. For an historical perspective the current median sale price is approximately at the same level as mid-year 2002 (see figure 3).

During the third quarter of 2011 there were two potentially significant shifts that occurred in the San Diego real estate market.

First, the housing supplies have reached below normal levels across a wider range of price points . The number of current listings and absorption rates suggests a more competitive environment, in the near future, for buyers in most housing price ranges. The impact of current supply levels will be analyzed in subsequent reports.

Second, the highest number of detached housing sales shifted down from the $300,000 to $400,000 price range into the $200,000 to $300,000 price range. While the overall number of housing sales remains relatively stable, there has been a shift to a lower price point for detached housing.

With the highest concentration of detached housing units now selling below $300,000, real estate professionals must continue to focus on setting realistic price expectations for sellers as a way to stimulate demand for properties as we enter the fourth quarter of the 2011 housing market.