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Downtown San Diego Inventory, Sales & Price 5 Year Trends - July 2009
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The Downtown July sales were the best in 5 years and the July pending activity indicates that August should be another good sales month.  The robust sales growth has been dominated by the growth in sales in the Columbia, East Village and Cortez Hill. The Marina and Little Italy districts have seen the biggest drop in the proportional makeup of sales Downtown. Bank owned properties and short sales make up about 44% of the sold in July while only being about 19% of the current inventory. While each district has bank owned and short sales, these distress sales do tend to be focused on Little Italy, East Village and Cortez Hill. Distress sales affect the overall average price direction by lowering the average price. Bank owned sales are 29% less than non-distress sales for the same size condo and short sales are 15% less than non-distress sales for the same size condo. Some of the lower price for the distress sales can be attributed to the condition of the home. The overall months supply downtown has reduced to just less than 5 months, down from 10 months just a couple of months ago.  However, the larger condos – over 1600 sq ft – still exceed 30 months supply and makeup over 23% of the inventory and only about 5% of the sales. This indicates that the larger condos Downtown will have negative price pressures moving forward. All San Diego Downtown Districts have seen price declines since July 2008 and the average decline is in the 15% range.  However, what you find when you extract the distress sales from both 2008 and 2009 the price decline for the non-distress sales is less than 5%, clearly price changes are being impacted by the bank owned and short sale sales. Since the makeup of the pending sales is 44% distress sales we should expect to see the same price patterns moving forward. It appears the banks have become more aggressive in their pricing in the past year to move product. In July 08 the average bank owned was 935 sq ft and had an avg selling price of $346,000 and in July 09 it was 900 sq ft with an average price of $258,000 and the banks were able to cut their days on market in half with the new pricing. It will be interesting to see moving forward what happens to the demand as fewer bank owned properties are available for sale, as of today there are only 20 bank owned properties listed for sale. The Downtown San Diego condo market is enjoying a robust Spring and early Summer selling season which is primarily price driven with the lower priced distress sales making up 44% of all sold homes in July. August should see another good sales month and based on pending activity so far in August the good sales should continue into September. What could slow the market down is the distress component of inventory provides fewer homes to buy since those are the homes that buyers find affordable. |
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