A San Diego Housing Recovery?


by Scott Murphy

Don’t let San Diego’s plunging median sales price fool you. December’s Existing Home Sales data has San DIego home sellers either smiling–or groaning.

Nationwide and just one month after falling below the 5-million unit trend line, sales volume roared back by 300,000 homes in December, surprising housing analysts and making a case that this spring’s home buying season could be a competitive one.

Declining home prices helped fuel home sales, at least in San Diego. Nationally, the median sales price — the point at which half of all homes sold for more and half sold for less — was $175,400, down $32,000 from last year.

In the San Diego real estate market, sales are up 34.7 percent from December, 2007 with a median price of $300,000–down from $430,000 during that same period. It is also interesting to note that San Diego foreclosures have also declined as a proportion of resales, going from 52 percent of sales in November to 50.4 percent in December.

San Diego real estate prices may not yet be at bottom, but it appears we may be approaching some sort of equilibrium–just like other areas of the country. The most important part of December’s Existing Home Sales report, though, isn’t making headlines.

Looking at December’s sales pace, it would now take 9.3 months to exhaust the existing home supply. Last month it was 11.2 months. This means that buyers are competing to purchase fewer homes which, in turn, puts upward pressure on home prices.

This is the classic definition of Supply and Demand.

Economists note that the keystone of housing’s recovery will be rebalancing the supply of homes for sale. Paired with the all-time low in housing starts, December’s Existing Home Sales data could very well signal a coming recovery in the real estate market.

(Image courtesy: The New York Times)

2 responses to “A San Diego Housing Recovery?

  1. Try to find hope and comfort is any numbers you want. The reality is the market will continue to decline and the supply of homes will increase as the ecomomy worsens yet further and banks continue to fail. The bottom may be this year but…it's going to get ugly.

  2. Billy,

    We noted that San Diego real estate prices may not yet be at bottom, especially with bleak economic news on the horizon. I'm not even sure that there will be a notable recovery of any kind in 2009. On the other hand, many of our buyers and investors are frustrated at the competing multiple offers we are encountering on so many distressed “bargain” listings. This offer phenomena, more than anything else, will help to get the San Diego real estate market back on its feet.

    Some have called this a “sloppy bottom” that we may have to endure for a year or two more. Only in hindsight will we be able to see a market bottom with any clarity.

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