Demand has dived off the cliff. We used to sell 42K homes per year, this year we are on track for 30K. People are leaving SD. Check U-Haul rental rates, they are much higher to leave SD to any city, than the other way, because SD has a glut of UHaul vehicles.
Sales are down 30% over last June, and the rate of sales decline is INCREASING. Q4 05 was down 10%, Q1 06 was down 20%, and Q2 06 is down 30%. I think Q3 06 will be down 40% from 2005.
Demand is down, and that is the only reason inventory is high. If we were still selling the same # of homes, then our inventory would be at 16,000 like it was last year. The reduced demand is accounting for the high inventory.
I already gave you the Census Data.
Stories abound, like the haircutter who went to 4 days because so many clients left SD. My friend who’s a realtor said in a recent showing weekend, he heard 5 sellers talk of leaving SD after they sold.
San Diego employers are having trouble filling their vacancies. Qualcomm has 500 openings they cannot fill. I posted an article last week, about a story that doctors are not moving here, and even surgeons and ear/nose/throat specialists are not coming here to take available jobs, because they cannot afford to buy a house here.
Although people want to live here, there is a limit to their ability to pay. We are past that limit, so the tide has shifted. People WISH they could live here, that is true. But they are not able to make that wish a reality.
If you look at the HAI (housing affordability index), the only city in the entire country with a more expensive rating is Santa Barbara. Only 6% of San Diegans can afford a median priced home, so that puts the demand way down.
Also look at what’s selling. The $2mil and up market is hot, but everything else is really slowing down. Even the $2 mil and up market is seeing big price declines, but those buyers are still able to buy homes because their income comes from the stock market, not the low wages we have here. Our city just doesn’t have the types of jobs or salaries for these current prices. If you were an engineer offered $85K to work at Nokia or $85K to work for a firm in Dallas, which would you pick? Most pick Dallas, while the few that pick SD, end up renting. That’s the sunshine tax.
Anyway, the data that I found, and I looked high and low and spend many hours every day researching this stuff, is that demand is down, down, down, and there is nothing on the horizon that would indicate a reversal.
Now I am curious. What data do you have to show that demand is up?
