San Diego regional sales in June were down across all regions from last June. The sales decline across all regions demonstrates that the drop in demand is market wide not just a localized decline. The coastal regions – Central San Diego Coastal and North County Coastal – had the smallest sales year over year declines and South Bay had the largest decline. However, June sales did increase from May and again the increase was seen across all regions. Looking at the different housing profile by region (bottom of the Community page) I find it amazing that all regions, while having different changes in sales, are all going in the same direction. I would have expected that we would have had regions with up sales and regions with down sales. Distress sales (foreclosures and short sales) make up about 45% of all San Diego sales. However, there is a wide variation in the distress sale component from region to region. Three regions have over 40% of their sales as distress sales, the largest portion of distress sales being South Bay at 55%. The lowest distress sale region is North County Coastal at 27%.

While inventory has remained fairly flat through 2011 in all regions we do see differences in the months supply. The two coastal regions have the highest months supply in the area of 5.5 months while South Bay’s months supply is 2.5 months. The current housing environment is not very encouraging for people that would like to sell their home so I believe that many would be sellers are not selling. I do not see anything on the horizon that will dramatically change the inventory picture in terms of new listings. The months supply will follow ups and downs of the market demand. A change in high balance conventional and FHA loans at the end of September could have the impact of lowering demand and possibly prices. This will change the loan limits from the current $697,500 to the 2008 levels of $546,250. This means that jumbo loans with higher interest rates will be effective at lower purchase prices.

Again we see consistency with price trends across San Diego’s regional housing market. June year over year prices declined across all Regions, the largest decline occurring in North County Inland with a 10% price decline. Overall county home prices are still over 30% below the peak prices of the past. The price declines from 2007 regionally are in the 30% region except that North County Coastal is at 25% and South Bay has experienced a 42% decline. While current prices have dropped from a year ago the declines are modest compared to the past. I do not expect to see any major price declines of the magnitude of the past. As a matter of fact, I am a little surprised that we have not seen any upward movement in prices due to the relationship between inventory and demand. Sometimes it takes a while for market psychology to catch up.