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How Are San Diego Houses Selling?
The San Diego real estate market in the Fall 2009 continued to show early signs of recovery. The median price of houses sold in October 2009 increased 2.9% from the median price a year earlier. This was the first time since June 2006 that the median price increased over a 12-month period. The price appreciation seems nominal, but it truly represents 12 months of steady demand for homes, especially entry-level houses.
Short supply of entry-level homes for sale in San Diego is frustrating buyers and pushing up prices at the bottom end.
The past year been characterized by: 1) High demand and low supply of San Diego homes for sale in the “conforming” price range (under $697,500) 2) High supply and low demand for upper-end luxury homes priced over $1 Million; and 3) Relative equilibrium in the $700-$1 Million range. Entry-level home buyers are having difficulty finding houses to purchase. Mid-range buyers are finding room to negotiate. Luxury home buyers can have the pick of the litter.
Today, December 2, 2009 the San Diego MLS shows 2,113 houses priced at or below $500,000 in all of San Diego County. Include only houses with 3 bedrooms and the number drops to 1,708. Exclude age-restricted (retirement) communities and the number drops to 1,669. Looking for a 3+ bedroom, 2+ bathroom house with a modest minimum of 1,200 square feet of living area? The number drops to 1,440. Exclude some of the more remote areas of the county (Alpine, Boulevard, Campo, Descanso, Delzura, Guatay, Jacumba, Jamul, Mount Laguna, Pine Valley, Potrero, Tecate, Bonsall, Borego Springs, Fallbrook, Julian, Pala, Palomar Mountain, Pauma Valley, Ramona, Ranchita, Santa Ysabel, Valley Center, Warner Springs, Otay Mesa, and San Ysidro) and the number drops to 1,090.
Further narrow down the surrounding cities of Escondido, Oceanside, El Cajon, , and Vista, and what’s left is what most people start to think of as “San Diego”… and here the number drops to 640. Is South Bay not your style? Remove Bonita, Chula Vista, National City, Imperial Beach, Spring Valley, Lemon Grove, Logan Heights, Encanto, and Paradise Hills. The number drops all the way to 292 houses for sale.
The majority of these 3+ bedroom, 2+ bathroom houses priced under $500,000 are in downtown San Diego 92102, Linda Vista 92111, and East San Diego 92115 and 92105. 48 are in San Marcos, 26 in Santee, 27 in Mira Mesa, 27 in La Mesa. There is only 1 house in Encinitas, 1 in Cardiff, 7 in Carlsbad, 4 in Scripps Ranch, 8 in Rancho Penasquitos and 15 in Poway. That’s not a lot of selection if you are looking to live in one of the better school districts in San Diego. And no, there are still no houses for sale in Rancho Santa Fe, La Jolla, Del Mar, or Solana Beach priced under $500,000.
Now consider the “mid-range” San Diego, houses priced $500,000 to $1 Million. Many of these are houses that were valued at more than $1 Million just a few years ago. In my opinion, these mid-level homes currently present the best opportunities for intermediate-term upside gain. In contrast to the ultra-competitive bidding war environment for entry-level homes, buyers in this more upscale category are able to negotiate with the Sellers at a reasoned pace. Motivated home sellers are willing to accept lower prices, and are coming up with a range of incentives, including closing cost credits and pre-paid expenses, home furnishings, partial seller financing, and lease options.
Picking up where I left off above, compared to the 292 houses for sale in the under-$500,000 range, there are 812 San Diego houses for sale in the $500,000-$1 Million range. And where there were once no homes for sale in this price range, buyers are now finding options: 10 houses in La Jolla, 10 houses in Solana Beach, 50 houses in Camel Valley, and even 1 house in Del Mar and 1 house in Rancho Santa Fe priced under $1 Million.
And what about the luxury home market, priced over $1 Million? Right now there are hundreds of opportunities to negotiate for San Diego luxury homes. For example, currently there are 264 houses for sale in Rancho Santa Fe, or roughly 8% of all the homes in zip code 92067. In all of 2009 only 91 houses in 92067 closed escrow, an average of only about 8 houses sold per month. There are 18 Rancho Santa Fe houses in escrow right now, so the current pace is above the 2009 average. Luxury home buyers are coming back into the market to grab some very attractive deals. But the inventory of luxury homes for sale in San Diego is not likely to run low in the near future.
Tags: Homes for sale in San Diego, Rancho Santa Fe homes, San Diego Luxury Homes, San Diego Real Estate
16 Comments to How Are San Diego Houses Selling?
Comments
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This is great information. It really helps explain the bidding wars on the low end and the REAL inventory on the market, thanks for sharing!
-R
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It’s interesting to look at some of the local market analysis from around the country. I recently heard someone on the west coast surmise that the luxury market had the most room to move (I believe he said fall). It seems your summary is inline with his thoughts as you’re seeing more homes available in price ranges where there once was scarcity…
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I’ve spoken to a few brokers from CA and seems like the market is rebounding across the board. I’m glad to hear San Diego is doing well. Beautiful city!
Great analysis.
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Good to see yet another location finally beginning to recover after the recession.
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San Diego is a great place too live and now is a great time to buy if you are in position to take advantage of the market today. Very low interest rates and a pull back in the market value makes today a great time to buy in San Diego.
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Prices in San Diego are low? Compared to what? Looks like Florida offers better value at the moment. Perhaps capital appreciation will be larger and quicker on the West Coast?
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This explain why my investors from that area quit buying in the Dallas area. We need for prices to go back up there so the investors will come back here.
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It looks like San Diego is recovering already from Global recession particularly in your mid-houses. Same here in the Philippines, real estate industry is getting better.
Philippines Condominiums´s last blog ..Condominiums in the Philippines
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The price of houses in San Diego is not very high. It’s normal.
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The real state market is very new thing for me, i am totally unfamiliar with it. But now i am thinking to make some tries in this field. what would you suggest me if i say yes.
Morgan@business intelligence systems´s last blog ..Next G Business Applications: game on IBM and Oracle, and so long HP -
This is very detailed info here. Looks like the economy is going to be the biggest factor for the housing market to come back, lack of jobs is what is causing more and more foreclosures at this point.
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The economy is coming back, and the real estate market with it. Competition has become even more fierce for bargain priced San Diego homes since I wrote this article. Houses under $500,000 are becoming more and more difficult to purchase. Most properties in this category are being overbid. That will be the topic of my next blog post. We’re still seeing great opportunities to negotiate real deals on San Diego luxury homes that are priced above $1 Million. But those deals will end soon too as more and more lenders are loosening standards on Jumbo Loans. We’re seeing low down payments and low rates on multi-million home loans, which indicates that the upper end will be strengthening. Until the upper end of the real estate market has lagged the recovery of the entry level.
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Russell Volk from 
Howard from 
Morgan from 
Lots of great information here, great analysis, and you are definitely educated on your market. Our luxury market is the same, it seems to have picked up a lot here as of late, and those homes that were selling, are now slowing down. Great post!