San Diego Real Estate & Homes for Sale :: Robert T. Boyer, Ph.D.

With the end of the summer buying season for La Jolla homes for sale, it is prudent to keep a close watch on the inventory level as it directly affects the the La Jolla home prices and especially the time on market. The following chart breaks down the inventory into price range categories. The information is current as of October 19, 2009.

P.S. Unless you want to have your home on the market for 7 years, I suggest you avoid the $3.3m price range.

Other recent San Diego Real Estate Market Reports:
Will SELL Your Home in 6 years + 4 months, or less - GUARANTEED!!!
San Diego Homes for Sale - Months of Inventory - October 2, 2009
San Diego Homes for Sale - Median Home Price drops 7.24% in last 12 months
San Diego Home Sales Continue Normal Pace for September 2009

I just received an update from ForeclosureRadar, which focuses on California Real Estate Foreclosures titled

NO SHADOW INVENTORY OF BANK OWNED HOMES
Foreclosure Investors Still Finding Discounts at Trustee Sale

Discovery Bay, CA, October 13, 2009- ForeclosureRadar (www.foreclosureradar.com), the only website that tracks every California foreclosure and provides daily auction updates, issued its monthly California Foreclosure Report for September 2009. This month's report features not only a new look, but an important new statistic - Bank Owned (REO) Inventory. By looking at the number of foreclosures the banks have taken back and subtracting those that have since resold, we are able to show the number of foreclosures the banks have held as inventory over time.

The full report can be found at: https://s3.amazonaws.com/CA_Foreclosure_Report/September+2009+CA+Foreclosure+Report.pdf

I don't usually print out reports, but I felt compelled to on this one.

A good place to find the deals referred to are at http://www.FinestExpert.com

I always love to hear the advertisements with a guarantee on the number of days it will take to sell your home - especially when you discover the small print requires massive discounting. I decided it was time to take a look at just the higher end of our market - San Diego Homes for Sale at $1,000,000 and above.

San Diego is home to communities of Coronado, Point Loma, La Jolla, Del Mar, Solana Beach, Encinitas, Carlsbad, Rancho Santa Fe, with the majority of the million-plus dollar properties being La Jolla homes for sale and Rancho Santa Fe homes for sale.

Looking at the chart, we can see the consequences of natural human pricing behavior - to create an imagined price point break at common numbers - usually where we roll-over into the next million. We see a spike in months of inventory at:
$1.9-2m range ==> 36 months
$2.4-2.5m range ==> 33.6 months
$2.9-3m range ==> 59.3 months
$3.9-4m range ==> 63 months
The $4m+ range just catches all the truly unique homes for which there are very few buyers.

It would seem to me that the best way to help your seller is to NOT be lumped in with all the other people trying to create an illusion about the home price. You could try to be tricky and market a property at $1,999,999, so as to not break the $2m barrier, and you should clearly inform your seller that they should expect the property to take 3 years to sell. But the reality is that you should expect to lose about 5% ($100K) on a negotiated price discout. How about cutting the time to sell the property by standing out from the competition. Market it at $1,899,999 and expect it to sell in less than half the time - a mere 17.9 months (and stick more tightly to the asking price during negotiations).

Not to be (too) flip, but when you get to this price range, $100K (asking) doesn't really make that much of a difference - it is all in the mind of the seller anyway. Ultimately, isn't it the selling price and the time on market that the seller cares about?

Back to the title... 6 years and 4 months. The other "clever" pricing strategy is to repeat digits. $2.2m or $3.3m. What an ugly mess that brings us to. The amount of inventory for homes listed from $3,300,000 to $3,399,999 is 76 months (6 years + 4 months). Did you advise your client they could go from childless to kindergarten before their home is expected to sell? Did you tell them their high school senior will graduate from college before their home sells (and on the 5-year plan as well)? But drop the ASKING price just one notch and the months of inventory drops to less than half (sadly it is still almost 3 years - so send the kid to vocational school instead).

With the end of the summer buying season for San Diego homes for sale, it is prudent to keep a close watch on the inventory level as it directly affects the the San Diego home prices. The following chart breaks down the inventory into price range categorys. The information is current as of October 2, 2009.

In terms of change, single family attached homes have less inventory, across the board, up to $900,000. San Diego single family detached homes for sale had less inventory across most price ranges, with only a slight increase (less than 2/10th of a month) between $350,000 and $600,000.

Barring outside influences, home prices are expected to be stable or inch-up through the end of the year.

The most significant outside influence is the first time homebuyer tax credit. According to NAR reports, this is responsible for approximately 20% of all sales in the last year. With the tax credit about to expire, home sales... at least until such time as an extension is announced. Given the current limited inventory, home prices are not likely to suffer much over the next several months.

As the following chart shows in regards to San Diego homes for sale, the median home price has dropped 7.24% from September 2008 to September 2009. Please note, the chart specifically targets 3-bedroom, 2-bath homes as this configuration provides the most stable method of measurement.

It is always useful to compare the price per sq ft to see if the buying pattern is affected by the size of home. In the next chart the San Diego home sales are plotted both by price and price per sq ft. Apparently the home sizes are shrinking slightly as the decline in the price per sq ft is only a decline of 5.64%.

It is somewhat interesting to see that only in the last year have we seen a difference is the rates of change of price and price per sq ft. If this is any indication, it would appear that basic inflationary pressures are also at work in slowing down the decline in the cost of housing.