San Diego and National Housing Inventory Fell In December


We all know that home prices are largely based on Supply and Demand, and that this hold true whether we are speaking of San Diego real estate–or that in Topeka, Kansas.


  • If demand outweighs supply, home prices rise
  • If supply outweighs demand, home prices fall

It’s good news for home sellers, therefore, that “used” homes for sale fell 6 percent nationally last month — and a more significant 8.3 percent for San DIego home sales. Less supply often means higher prices.

Of the 29 metropolitan areas tracked in the survey, only Philadelphia showed an increase, while the greatest decrease in inventory occurred in Boston, followed by the San Francisco Bay area and Orange County, California.

This survey, though, is far from perfect.  For example, it doesn’t track the demand side of the equation –only buyer activity.

Typically, November and December are slower for buyer foot traffic than March and April.  December’s drop in supply, therefore, may simply be reflecting the expectation of reduced buyer interest.

Additionally, the survey ignores the supply of newly-built homes as well asforeclosed properties.  In some cities, that can amount to 25 percent  or more of the market supply.
Finally, the survey addresses the nation and not the nation’s neighborhoods.  This is an important distinction because real estate is not a nationwide market, nor is it even a citywide market.  Real estate is highly local and responsive on a neighborhood-level. Even San Diego real istate is local.

Regrettably, national surveys rarely capture that point.

(Image courtesy: The Wall Street Journal Online)