Happy October 1st to all. Hard to believe that summer has passed and Halloween is around the corner.
The San Diego real estate market continues to be especially crazy in the lower price ranges while the higher ones languish until better financing options become available in the jumbo market.
• Current overall inventory of attached and detached homes (excluding land & mobiles) stands at 7,870 units, about 50% of the "normal" amount available.
• 5,449 detached homes are now on the market. During the last 30 days 2,117 went into new escrows and another 2,295 went "contingent" (short sales or bank owned properties with accepted offers awaiting approval from the lender(s). This means that a total of 4,412 detached properties went off the market in September. Dividing the total inventory of 5,449 by 4,412 means that we have a 1.24 month supply of detached homes. This means prices are rising. In my personal experience recently we have found ourselves competing with up to 25 buyers on the better properties. Buyers are often making insanely high offers hoping they can renegotiate the price if the appraisal comes in low but in many cases are finding the sellers refusing to accept appraisal contingencies or to lower prices.
• 2,421 attached properties are now on the market. 1,108 attached properties went into new escrows last month and 1,955 went "contingent". Combining these two numbers yields a 0.8 month supply of attached homes, obviously a seller's market with prices on the rise.
• Combining detached with attached homes shows us a total inventory of 7,870 properties with a total of 7,475 properties go pending and contingent, yielding a 1.05 month turnover rate for the overall market.
What does this mean? Simply put, buyers must be very aggressive both in terms of price and timing. Offers below the listed price often stand little chance and those asking for a longer closing period or other concessions are at a disadvantage. Unfortunately, FHA and VA buyers are also suffering as sellers lean towards offers with more cash invested and fewer demands by the agencies. Buyers can often expect to make offers on multiple properties at the top of their financial abilities. I have been advising my clients in many cases to lower their search price maximum so they can afford to overbid for a property and stay within their loan pre-approval limits. Low ball offers typically draw no response from sellers and it is a mistake to assume that San Diego real estate is the same as real estate in the rust belt. While it is true we have our own regional economic issues it is also true that real estate is highly local. It is not accurate to say that the average temperature is 75 degrees everywhere in the U.S. nor is it safe to say that real estate in depressed areas is the same as it is here. Our relative lack of buildable bulk land should contribute to the shortage of supply over the upcoming years.
This is an OUTSTANDING time, in my opinion, to make a real estate purchase that should look very good in a few years. Prices and interest rates will not stay this low forever so we should not lest this opportunity pass.
