The spring bounce started off slow with a very low increase in sales from February to March but we have seen steady increases in sales since. The increases have occurred in the 1000 to 1900 sq ft home sizes, the $300,000 to $500,000 price range. Sales for homes over 2200 sq ft are still significantly lagging prior year sales. The slowdown in the market began with the low end homes and rippled up to the larger homes over time because after the entry level buyer was knocked out of the market it negatively reduced the move-up buyer market. It is possible that we are seeing the same phenomenon beginning but in reverse. It is important to remember the long time lags in these trends; it is like ripples on a pond.
While inventory has remained fairly static around 19,000 homes, the increase in sales has reduced the months supply from 13 to 15 months in February down to May's 8 months. Eight months is still technically a buyers market, the important thing is the direction of the trend line. In normal markets the months supply change would indicate a reduction in the downward pressure on prices. However, we now have the foreclosure market sitting on top of us with its entire negative price connotations. We can take a glimpse into the future by looking at the foreclosure pipeline and see the potential magnitude of future foreclosures.
The more the inventory is made up of distress sales the more they offset the positive news associated with the declining months supply. The make up of distress sales comes from the foreclosure chain - short sales to NOD's to auctions to bank owned properties. We need to watch both the trends of months supply and the level of distress. If both factors move in the same downward direction then the market is beginning to shift modes, again remember these things do not happen over night. Arm resets are with us in major numbers until the fall of 2011. The lag time from a NOD to bank owned and on the market can be as long as a year or more. It is hard to predict how many resets will cause foreclosure damage but clearly there will be some. Some of the negative impact of foreclosures on prices can be reduced by continuing the downward trend in months supply.
Another issue is the large month's supply of high end homes, the over 3100 sq ft homes have about 13 months supply with some foreclosure exposure. If this part of the market has serious price declines then price compression down the line could take place. However, the new conforming jumbo loans with lower interest rates than jumbo loans could help bring more buyers into this market reducing the potential negative impact on prices.
I believe we will still see declining prices but at steadily reduced rates of decline. San Diego is still a market with more negative forces at play than positive, but this spring has been a bright spot so far.
For more details and to see my Downtown Condo report visit my website www.fidelitypacificrealestate.com
Data from Sandicor is deemed reliable but not guaranteed.
Approximate Location Boundaries: San Diego County
Location Characteristics: encompasses all of San Diego County
About Bob Casagrand:
As a Real Estate Consultant I serve both Buyers and Sellers with the goal of 'sell for more buy for less'. For Buyers, my Preferred Buyer Program provides you with the tools, information, guidance and council to assist you in making the buying decision that best meets your goals. For Sellers, my Magnetic Home Marketing System will market your home to be sold not just list your home for sale, with the objective of 'selling faster for more money', even in today’s market. Oh yes, for those of you that sell and buy your home from me I have a Total Value Program, which gives you the best of all worlds. For more details on any or all of these programs just e-mail your request to me at bcasagrand@searchinsd.com
In this transition market, if you are looking to buy or sell a home now or even 6 months or more away there are a couple of things you should do. Remember, information is the key to wise decision making. First, you should sign up for the home locator program on this website. The up-dates on new listings will keep you current on what is available on the market. For Buyers this will the opportunity to see the new listings as they happen and for Sellers you will be able to see what is going on with competing homes. Of course, I am only a 'click' away from being of assistance to you on any questions you may have about a specific property or the market in general. Second, you must keep up-to-date with current market trends; unit sales, average price and interest rates. The perfect tool for you to do this with is the premier real estate newsletter, Realty Times. This newsletter has daily up-dates on interest rates, a library of buyer/seller relevant articles and once a month a Market Trend analysis of San Diego and various neighborhoods. The beauty of this newsletter is that if the neighborhood of interest to you is not included I can add it to out list. To get your free subscription to Realty Times just e-mail your request to me at bob.casagrand@gmail.com .By using these two tools you will be current with the market and it's trends, this will enable you to make the best buying and selling decisions of the most valuable asset you will ever have.
These reports reflect the views and opinions of their authors and are not necessarily the views and opinions of Realty Times.
