In the San Diego real estate market the trends are showing the market is moving into a neutral market with increasing inventory, less demand, slow increase of prices and supply growing. In 2009, the market cooled down much like was expected. Now, the 2nd quarter of 2010 we are a bit ahead of the 2nd quarter in 2009, however, June is showing sales are declining which is opposite of last June. Pending activity is going slower as well. June pending sales are lower than the average pending sales of April and May and July is already running 17 percent below pending sales in June. This lull is still happening even though low interest rates are available, so something else must be in the pot. One speculation is that the tax rebate program ended on April 30 may bring sales forward as does incentive programs. The prices increased over the last year, which more than likely made it impossible for first time buyers.
Lower priced homes as well as neighborhoods with lower priced homes are being ignored, Central San Diego Coastal and North County Coastal with homes selling on average in San Diego for $764,000 and North County on average at $640,000 increased sales. Homes under the $200,000 market are declining and this past year this segment lost 25 percent in market shares, which dropped to 20% of total sales. The real estate market in San Diego is experiencing a new trend of reduced market share for foreclosures. The last year foreclosure sales lost 41 percent of the market share, which declined from 34% to a larger decline in June of 20% of the total sales. During this time period, short sales increased from 21% to 26% in June.
With these trends in motion, we will see a forward impact on the average and median prices. Each year we see demand soften it is just being seen a bit early this year.
All of these demand trends have and will continue to have going forward an impact on the average and median prices. Normally, demand softens in the early Fall so it is coming early this year.
Inventory is expected to grow and since the demand is soft the months supply will continue to increase. This will allow the prices to reduce as the pressure will be off and we can slowly slide into a neutral market.
At this time in San Diego an 1100 square foot home sold for $256,000 in June of 2009 and in June of this year sold for $302,000, which was an 18% increase. Prices are slowly increasing, but we are noticing a month over month reduction in the price increases.