More experts are calling a bottom to the San Diego real estate market. On Saturday the San Diego Union Tribune featured a quarterly report by MDA DataQuick which showed price increases in 8 of 56 neighborhoods during Third Quarter 2009. The largest increase was in West Escondido (zip code 92029) where the median price of a single-family house increased to $537,000, up from $467,000 in the third quarter of 2008.
The DataQuick report and numbers were not published in the Union Tribune, so I went to investigate. Unfortunately, no such quarterly report is posted on the MDA DataQuick website. The median sales prices of resale houses and condos, new homes, and all San Diego homes combined are published as the “San Diego Union Tribune Zip Code Chart.” There is also a report dated October 13, 2009 which is entitled “Southern California home sales inch up; median price steady.” Those are the figures that I will consider here.
First, according to the chart of median San Diego home prices by zip code, the median resale price of a detached single-family house increased in four out of five regions in San Diego County. Between September 2008 and September 2009, Central San Diego was up 4.3% (to $386,000), East County up 0.6% (to $316,750), North County Inland up 2.7% (to $380,000), and North County Coastal up 11.5% (to $485,000). Only South Bay remains in the red, with the median price of detached single-family houses down and average of 11% (to $316,000) from September 2008.
In Central San Diego, the median price of La Jolla homes sold in September 2009 jumped 21.7% from a year earlier, to $1,525,000. The median price of Coronado homes also increased substantially, up 17.6% to $1,610,000. The biggest increase along the North County coast was Cardiff by the Sea, where the median house price increased 38.9% from a year earlier, to $722,500. Del Mar homes also got a boost, up 11.6% to $1,350,000. Looking at those numbers, it would be tempting to call a bottom to San Diego luxury homes. However, in North County Inland, Rancho Santa Fe real estate is lagging. There were only 6 Rancho Santa Fe homes that closed escrow in September 2009, and the median price of $1,550,000 was down a whopping 43.6% from a year earlier.
Condominium sales tell an entirely different story. From September 2008 to September 2009, the median price of condos fell in all five regions of San Diego County. And, whereas houses in South Bay registered the largest price declines, the median price of condos in South Bay held steadier than the price of condos in any other region. Central San Diego condos were down 9.3% (to $245,000), East County down 21.2% (to $130,000), North County Inland down 8.2% (to $202,000), North County Coastal down 10.6% (to $316,500), and South Bay down just 1.6% (to $180,000).
New home sales represented only about 10% of the sales in each region. The median price of new homes is down for the year in four out of five San Diego regions. There seems to be little doubt that new home sales continue to be sluggish. Builder incentives may even be understating the level of price declines, as many builder incentives, upgrades, and closing cost credits are not reflected in the final sales prices.
Looking at the final tally of all sales of San Diego homes, the median prices of all homes sold in four out of five regions of San Diego County are just about flat (between 0.2% increase and 1.5% decrease), and South Bay is still in double-digits, down 11.2% from September 2008. But, as always, the median prices don’t tell the whole story. It seems clear that the low inventory of San Diego houses for sale has created upward pressure on prices. But despite the relatively low inventory, San Diego condos continue to experience price reductions. This suggests that the old adage “the value is in the land” is holding true in the current economic environment. And finally, more San Diego luxury homes are selling, so the upper end is seeing median price increases in some neighborhoods, such as La Jolla and Coronado. But there is still a lot of inventory at the upper end, so your San Diego real estate professionals aren’t willing to call a bottom in that sector.
This is so uncertain. We cannot come to conclusions just by considering the median prices. I remember a recent read of AP news article which stated there is a strong rebound seen in home sales. We have to wait and see as the job rate is probable to rise to 10.5% from an prevalent 9.8%.
You are right that median prices are not reliable indicators of the overall real estate market. But it is clear that there is huge demand entry-level homes which qualify for conforming loans under $697,500. It is day and night with the luxury home market in San Diego.
We hit the bottom here in Denver about 7 months ago. I was telling clients then that they better buy quick. Now we are in our 6th straight month of increased prices.
It has been a frustrating year in San Diego also. I was highly criticized for telling people about the upward pressure on homes prices in San Diego. This time last year there were homes for sale in San Diego for under $300,000. Now anyone who is looking for a house in the $300,000’s is overbidding and still being overbid. It’s rough out there for anyone looking to buy a house under $400,000 in San Diego.
Our market here is teetering month to month with price increases and decreases. It’s quite hard to tell if we are at the bottom, but I can say we are pretty close. I’m glad San Diego is showing good signs, we usually bounce back slower, but the bigger markets have a great effect on how fast our market comes back.
I feel the same way that you do. It’s sometimes hard to tell where things stand. I think the $8K tax credit to first-time home buyers has been very effective at stimulating the lower end of the market. And that really is something that “trickles down” or up as the people who sell to first-time buyers usually either move up, or at the least, reinvest. I’m hoping for quick passage of the tax credit extension.
i believe it ultimately comes down to consumer sentiment. If the majority of the public decide that prices have bottomed than they have and you will only see up from there. If consumers do not believe prices have bottomed on average you will not see a strong recovery and any bottom that appears will be little more than a temporary standing place until federal incentives are used up. If the overwhelming majority of consumers believe prices are going to continue to fall they will despite government incentives.
Right now I think that we are sitting somewhere between neutrality with consumers and some are begining to believe that things are coming back around. Now this can easily evaporate if the Commercial bubble deflates to rapidly as it will put another umph behind increasing unemployment and if people do not have jobs they cannot buy.
I just bought a two bedroom condo in Mission Valley for 180,000 on a short sale.
Two years ago these places were going for 425k, so I think the lower end market is still plunging.
A lot has changed over the past two years. It’s hard to say prices are plunging when the median price for October 2009 is higher than the median price a year ago. For all of 2009 the trend has been heavy demand and short supply of entry level homes in San Diego. Detached houses are feeling more upward price pressure than entry-level condos.
Interesting site, especially with the economy still the way that it is. I would be interested in seeing more information as 2010 goes along to see if your opinion changes.
It’s amazing that prices have been going up San Diego is one of the expensive places to live in the US but increasing especially during the financial housing crisis. This has probably not helped sales as the housing market has been slow in recent years and only now starting to pick up again.
I’m glad San Diego is doing good! I think prices will never really go down there. It’s one of the best places to settle down in — good, clean, beautiful environment, awesome weather, friendly people. I guess all these come with a price, huh?
Congratulations on the good analysis by those who called the bottom to the San Diego real estate market back in 2009. Here in 2010 I’ve heard that San Diego home prices are staying higher than many other regions. It’s good to see accurate analysis. I trust the value trend continues.
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