San Diego Housing Bubble News and Analysis

Thank you for the info! Are these all single family or are condo/townhouses included?

detached

Per realtor.com, there are 129 single family detached homes for sale right now.
Taking the average sales for April and May (which only really affects the 1.75 – 2M), I came up with the following months inventory:

Under 1.25 – 5 months inventory
1.25-1.7 - 23 months inventory
1.7 – 2M - .8 months inventory
over 2M - 17 months inventory

The results were kind of strange, so I’ll put everything under 2M together – 4.8 months

Overall, the inventory is 9.21 months.

Hmm, how can the high-end market continue to appreciate with 17 months of inventory? According to the realtor I spoke to, the high end is appreciating while the low end is depreciating. However, most of the inventory is in the high end.

PD the appreciation rate is determined by the median correct? Now common sense would dictate that with longer inventory the median should go down because those on the market longer would lower the price.

Remember though that for high end property the expectation is a much longer period on the market. Also if the property was not priced correctly to begin with, then they lower the price after being on the market several months, they still may sell and it still may pull the median up...

Maybe what this realtor told you is true... maybe not. You know that stats can always be manipulated...

SD Realtor

Patientrenter asked me about Coronado in another thread and I decided to move my response here as I know there are few other people who are interested in Coronado (eagle eye – are you still out there?)

Prices have come down here in the under 2M market (I don't watch over that price so I don't know what is happening in in the over 2M).

There is a huge supply of homes here in the 1.4m to 1.8m range. A large portion of those homes are spec homes. There are a couple of local builders who buy an old home on two lots, tear down the house and build two tall and skinny houses. There are a mess of these homes available right now and they aren't selling very fast. I see some price reductions in the future! Prices on these homes were in the 1.75m range. Now I'm seeing them in the 1.4m - 1.5m range and the builders are advertising that the price includes design choices. I would not be at all surprised to see some of these houses close around 1.2m this fall as these builders start getting pinched (only 1 house sold in this range in both May and April but there are 28 listings -yikes!)

These builders aren't like homeowners, they HAVE to sell and they are going to be forced to discount in order to move their inventory.

There are also a big number of new condos for sale at the north end of Orange. The prices are really high (1.5m and up). Why would anybody buy a condo that has a view of an alley for that price when they can buy a house? Apparently, they have a few in escrow but they are a little late to the party (they just had a "ribbon cutting" party about a week ago). I predict hard times ahead for the developer.

Quite a few months ago I had a conversation with someone about a friend of theirs who developed a condo building here at the end of the last cycle. The guy ended up going bankrupt and managed to convince the bank to let him live in one of the condos while the bank was repossessing the building.

It happened last time, it is going to happen again.

Thanks, PD.

The Coronado SFR median price per square foot in April and May was $1000 versus less than $900 for all SFR sales in 2006. I can't understand why it would increase by over 10%. Whenever I see hard data like that, I wonder if I am just deluding myself in my hope to see prices go down. (But I still believe they will. Problem is, I have no credibility with myself, since I was wrong in each of the prior 10 years!)

Patient renter in OC

Have you seen this site?

http://www.altosresearch.com/research/CA...

You can view a number of interesting charts about many areas around the country.

I wonder if it could be something like this: Days on Market are way up, so people are obviously getting more choosy about houses they pick. If they are going to buy a really expensive home, it had better look and feel expensive too. So what few buyers there are, are in it for top quality homes that are worth more p/sqft than lesser quality ones.

Good site. Thanks, w_a_d. I hadn't seen it before.

I like your creative and clever explanation of the increase in per square foot price.

I looked up my own neck of the woods here in coastal OC (Costa Mesa), and saw prices per square foot also higher than last year. We can see the inventory going up, and read the rising credit and foreclosure problems, and (a very few) drops in listing prices. But that's about it so far. Like PD says, it'll take another few months to start seeing a statistically verifiable drop. I'll hold onto my Champagne bottle until then!

Patient renter in OC

I'm still here PD. Someone said to me the other day that they think the realtors are trying to keep the prices inflated here. Did you happen to see the the new listing for 630 B Ave? MLS #070049217. $3825000-4250000! In my opinion that is at least $1.5M overpriced. Why would a realtor list it for such a ridiculous figure in this market? Regarding all of the new construction under $2M, I would never consider a 2 on 1 on a 3500 sqft lot. I would consider a "traditional" billy box but I can't believe that they are now putting 2 houses on one lot and trying to get $1.4M-over $1.5M for them. Look at 837 C Ave. They are asking $1535000 for the front house. Would you ever consider one of the back houses? I can't imagine who would and my realtor told me that there are 28 more similar units currently under construction. The "traditional" billy boxes are now priced upwards of $2M. The 2 new constructions in the 200 block of J have been on the market forever and have dropped in asking price from $1.98M to $1.68M but still no takers. There are 2 resales in the 800 block of H. One is listed for $1895000(reduced from $1.95M) and the other is listed for $2.1M! 841 B was listed for $1849000 and went pending in just a couple of weeks! That same property was on the market last summer for over $2M. Bottom line, my opinion is that sellers here don't believe prices are dropping and the local realtors are trying to support that delusion. I'll sit on the sidelines in my rental for now. I expect to remain there for at least a couple of years. I'd like to get a nice house on a 7000 sqft lot in a good location for under $2M. I suspect that you're looking for the same thing as are many many people I know who are also waiting and watching.

Eagleeye, I think the realtors are trying to keep the prices high, too. There are a couple who always price their listings really high in comparsion to the comps.

This is a gem: "My realtor told me that there are 28 more similar units currently under construction." Holy inventory, Batman! The amount of construction (and builder speculation) here is amazing. This could prove to be the Achilles heel in Coronado. There is a ton of inventory and each new addition just piles it on higher.

Those houses shoehorned in between two others (with neither road frontage or alley frontage) are really strange. I would not want one. Neither would I want a house that fronts the alley. If the alleys were tidier, I might consider it but they all look very haphazard and messy. Sorry, but I don't want to pay a million + dollars for a house crammed onto the alley.

PR, even though Coronado is small, I see Coronado as having about three distinct markets. There is the lower tier of under 1.25 - 1.3m, a middle tier of up to 2.5m, and an upper tier. The upper tier may still be making price gains, pulling up the price per square foot. The lower and middle tiers are experiencing some downward price pressure. Eagleeye, do you agree with my assesment?

FYI, A local realtor told me recently that houses (in the lower and middle tier) seem to be selling about 100k below asking right now.

I lived in one of those newer billyboxes. It was terrible! It was new, which was a welcome change from the other nasty rentals we'd had, but there was not a room in the house where you could have true privacy.
You can see in every window when sandwiched between a row of those buildings. The backyards are all completely exposed. Only way to get privacy is to let some shrubs grow tall, but then you lose the sunshine on your 9X9 patio.

I am simply stunned that anyone would pay over a million for one of those. Even $800k seems insane!, for half a house?! and half a yard?!

Got it, PD, on the $/sq ft. Like politics, all RE is very, very local.

Patient renter in OC

PD I would agree with your statement about the local realtors really pushing hard to keep the prices up high, especially for the high end properties in Coronado. Last year one of my clients ended up submitting offers on two different units in Coronado Village. Great Bay views. Both places were represented by Prudential agents from the office across the street.

SD Realtor