La Jolla continues to show declining demand and excessive inventory. While overall San Diego home sales in the first quarter of 2009 had over a 50% sales increase for both detached homes and condos, La Jolla had sales declines of 14% for detached homes and 20% for condos. This negative sales trend has continued into April with year over year sales declines of 20% for detached homes and 38% for condos while the county had increase over 20% for both types of homes. These sales trends are not unique to La Jolla but are seen in other higher priced neighborhoods. Over 80% of San Diego home sales are below $500,000 and just a few years ago that number was around 50%, indicating that the recent sales growth has not been in the higher priced market segment which includes La Jolla. A major issue for the La Jolla housing market is excessive supply. Combined with weak demand this puts detached homes at a 14 month supply, condos are doing better with a 7 months supply. For detached homes sized between 1600 sq ft and 2500 sq ft the months supply exceeds 20 months. This compares with an overall county average months supply of 3 months. This imbalance between supply and demand will create negative price pressures in the La Jolla market. While the supply issue would cause negative price pressures, it is difficult to track price trends for La Jolla due to the small number of data points – one sale can completely distort the trend. The other issue is the location distribution of the sales which makes year to year comparisons not relevant. What trends we do see indicate that prices are declining which ties into the over supply issue. Of the 10 homes sizes that we track 4 did not have any sales in April. Of the remaining 6 home sizes 5 had price decreases ranging from a low of 3% to a high of 49%. While I would not put great confidence in the absolute decline number the trend is clearly that prices are in decline. |