San Diego is broken into 6 regions - Central San Diego, Central San Diego Coastal, East County, North County Coastal, North County Inland and South Bay – each has a different real estate profile. We see very different market performances for each region. The current increase in demand is highest in the regions that experience the largest relative price declines – East County and South Bay – while the demand is down to flat in the coastal regions which experienced the smallest relative price declines.  Not only did East County and South Bay have the highest relative price declines but they also have the lowest average prices. Since the market is being driven by a large increase in entry level buyers, the growth in demand in East County and South Bay is to be expected. The months supply of inventory also varies by region with South Bay being the lowest at 1.3 months and Central San Diego Coastal being the highest at 5.9 months. However, as for San Diego, one has to be careful in viewing months supply on a regional macro basis, especially for regions with a wide spread in prices. Central San Diego Coastal is a case in point. Of the almost 1400 homes in inventory 53% have list prices in excess of $1 million and based on the pending activity this group has a 20 month supply, leaving the balance of the inventory at 3.7 months supply. The inventory in this region is so out of balance with the market there is almost a $1 million difference in the average list price of the homes sold to the homes in inventory. Price trends by region also show different dynamics.  We see all regions with year over year price declines. However, when we measure month to month price changes  the coastal regions show price declines while the other regions are showing prices being flat or increasing. The regions with the lowest prices are attracting the entry level buyers due to affordability. Since the entry level buyers are not generating move-up buyers, as in the past, the regions with the higher priced homes are not seeing the growth in demand. As long as the market has a large number of distress sales the move-up buyer market segment will remain low and the inventory will continue to be out of balance with the market place causing price increases in some regions and price declines in others. |