San Diego real estate is showing a number of trends in 2010 worthy of note; declining sales, increasing inventory, increasing months supply, foreclosures have reduced market share, sales have shifted from lower priced homes to higher priced homes and a slowing of price increases. All of these factors indicate that the San Diego real estate market is slowing down from the heat of the 2009 market. Supporting anecdotal evidence indicating some slowing in the market is that last year when showing homes you would see many buyers where this year when showing the buyer traffic is down substantially.

April sales were down from April 2009 by almost 10% with both detached homes and condos having declining sales. For the first 4 months of 2010 sales have declined by 4% indicating an increasing sales decline as we move further into the year. This would seem to indicate that the market will not have the spring bounce of one year ago. For April the only San Diego regions that had sales increases were Central San Diego Coastal and North County Coastal, the other 4 regions all had sales declines. For the past number of months we have seen the homes that sold for less than $300,000 lose market share indicating that this market segment indicating that the buyer pool has shifted upwards in price. In April this market segment dropped to 42% market share from 53% one year ago. While the shift in price is taking place we do not see any major changes in how the homes are being purchased – cash, conventional and FHA/VA. Pending sales remain in the 3,500/ month range, but 2 things are slowing down their conversion to sales – extended escrow periods and a 10% fallout rate.

San Diego real estate inventory for sale has been increasing since January and April inventory increased again. The increasing inventory trend is the first in 2 years. However, the increase in April was not due to an increase in new listings which actually decreased but due to a reduction in expired, cancelled and withdrawn listings for the most part. The growth in inventory is broad based with all price ranges showing an increase with the overall increase from March to April being 6%. Also, we see inventory increases in each of the regions within San Diego County. Even though inventory increased, pending increased month over month by 2% resulting in a slight increase in months supply to 2.7 months. The over $1,000,000 market is still in double digits with 12.5 months supply.

This chart shows the makeup of the inventory, pending and sold homes for distress and non-distress homes. We breakout the vacant homes even if they are not foreclosures or short sales because there is a different seller motivation versus an occuppied home.

San Diego home prices continue to rise year over year with all 9 size ranges that we check showing increased prices the blended average is up 19%. However, we are seeing the rate of price increase slowing which is what we expected. All of regions within San Diego County are showing increased prices except for Central San Diego Coastal so the pricing trends are consistent throughout the County. Also, year over year price increases are consistent for both detached homes and condos, again showing a broad based trend. On average detached foreclosures are selling for 5% less than short sales and 38% less than regular non-distress sales, over the past 6 months the price gap between these sales has reduced.