San Diego home sales for August were down about 4% from August 2008, but more unexpectedly they were down almost 20% from July.  Pending/contingent sales have also decreased in August. With almost 4000 pending sales for the past few months this decline from July was unexpected. For the past few months we have noticed that reported pending sales have been higher than the sold homes. Over time these lines should converge, a few months of 4000 pending sales should ripple into 4000 sales as the escrows close. Taking a closer look at pending sales we found that over 13% of pending have been in the pending status for in excess of 4 months and that about 80% of these pending sales are short sales. It appears that some listings marked as pending should actually put in as contingent to better represent the true state of the market activity. The drop in sales for August versus July was across all price ranges, but the largest decline in sales occurred in the under $200,000 marker segment. In terms of financing the largest drops in sales were with cash buyers and FHA/VA buyers which are heavily oriented to the under $300,000 market. Two sales trends have emerged in San Diego, one is year over year and the other is month to month this year. In 2009 we have seen all of the increased sales come from the less than $300,000 entry level market. The sales mix change has resulted in the overall average price decline which was 8% from August 2009 to this August. During 2009 San Diego has had a mix shift within the year. Since April the market has seen a mix shift with the less than $200,000 market segment declining as a percent of sales with virtually all other price ranges increasing their proportional makeup of sales.  The overall average price from January to August increased 13%; this increase is caused by the mix shift to higher price ranges as well as prices increasing.  The San Diego market has seen price increases in all types of sales - bank owned, short sales and regular sales. The only exception is in the higher end of the market where there is still excessive inventory. Looking at price changes year over year we see that for most home size ranges the price declines are smaller than the prior period. We still see the list price disconnect between list prices of the sold homes and the list price of homes in inventory of the same size range.  The overall inventory continues to decline and the months supply is still in the 2.5 month supply, seller’s market territory explaining the price increases.  The drop in inventory from July to August was 4% with the under $200,000 market inventory declining by 13% leaving that segment at only 1 months supply. Multiple offers, people removing appraisal contingencies just to get a home, etc. sounds all too familiar, not in a good way. When comparing the makeup of the inventory, pending and sold we are still seeing the same pattern of bank owned homes making up a relatively small portion of the inventory – 8% - but a much larger portion of the sold – 34%.  At this time it is difficult to tell if we are at the beginning of the San Diego market slowing down or August was just a blip on the screen. The increased prices could be pushing entry level buyers out of the market and the end of the stimulus – to get the $8,000 you must close escrow by Nov 30 – could also be taking some steam out of the market. Demand may slow down but what is not visible on the horizon is an influx of new inventory that would increase the months supply and change the overall dynamic of the San Diego market. |