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Thoughts regarding San Diego’s detached and attached sales + pricing mix:

1.  Elective sellers plan around the seasons.

2.  Bank-involved sales aren’t as seasonal, and appear to be well-managed.

3.  This wasn’t the year of the short sale. 

There were only 5% more short sales completed during the first 10 months of 2011, than in the same period of 2010.  Next year might get a boost from the threat of the debt-relief tax exemption expiring at the end of 2012, but sellers sure are nonchalant about selling/giving up the free-rent program.

 4.  Generally, the county-wide pricing is on a very slow descent, and mostly flat this year. 

When I say, “the inventory is thin”, it really means that the demand for good-looking-properties-that-are-priced-reasonably is healthy.  While that would seem obvious in any market, it is worth repeating when all you hear is how bad the real estate market is from the mainstream media. 

We have also seen that there is a relationship between inventory and sales/pricing. 

When there are fewer houses on the market, buyers feel pressed to gobble up the ones that are available – and end up paying whatever it takes.  Flash back to 2003 to remember the max-frenzy conditions!

Here are the comparisons of the total number of detached listings/number of solds between January 1st and October 31st in North SD County Coastal (La Jolla to Carlsbad).  There isn’t a direct connection between them – some sold this year were listed last year – but the TL/S-ratio trend is worth watching:

This year we’ve had the fewest listings since 2000, and more sales since 2007, the height of easy financing. Yet the balance feels relatively healthy, and like the old Jim Ratio of actives-to-pendings, I think we can say that a 2.0 TL/S-ratio is about right.

(For those with MLS access who are checking, because Sandicor deletes withdrawn listings from previous years, I deleted them from all years – there were only 211 this year. The expireds and cancelled listings are included.)

While it feels like there are very few good deals available, does it mean that there has been pressure on pricing lately?  Let’s compare detached sales and pricing in the same January 1st-to-October 31st period of this year, to last year:

With the exception of the Del Mar explosion, those numbers look as steady as possible.

From sddt.com:

Add another data point to housing’s ongoing bounce along the market bottom.

Sales activity of existing homes in San Diego County slipped on a monthly basis in October, falling roughly in line with its year-ago level, according to recent data.

The San Diego Association of Realtors (SDAR) reported that buyers purchased 2,292 total homes last month, virtually unchanged from the 2,297 sold last October but down 9 percent from a month earlier.

Of the homes sold in October, 1,546 were single-family homes. The single-family total is 10 percent fewer on a monthly basis but 3 percent above October 2010.

The 746 condos sold last month represented declines of 6 percent from both the previous and year-ago months.

Among single-family homes, the median sales price — measuring only the cost of the median home of all properties sold during the defined period, rather than a broad change in housing values –fell 1.3 percent from September and 7.6 percent from last October, to $355,000.

The median condo sold for $207,500, down 1.1 percent from September and 2.8 percent from last October.

The most pronounced change in the SDAR numbers, on an annual basis, is the average time properties spent on the market last month.  Single-family homes sold in an average of 91 days, 18 percent more than the 77 average days spent on market last year, and 12 percent more than a month earlier.

The for-sale inventory, especially on the low end of the market, has grown picked over as the distressed properties in the best condition are quickly snatched up after going on the market. Making matters worse, sellers who would typically be looking to enter the move-up market have abstained due to low prices and an unstable labor market.

“People go out and they get very discouraged looking at what’s on the market,” said Alan Nevin, principal of The London Group Realty Advisors last week, reached last week to discuss housing affordability in San Diego. “The number of listings of homes under 500 in acceptable areas is negligible.” (I think he means under $500,000)

Russ Valone, president and CEO of MarketPointe Realty Advisors, said the increasing prevalence of short sales might also account for the rising days spent on market average.

The average is calculated from the time a property is listed to the time it closes, not when it enters escrow. The notoriously lengthy transaction timeline of short sales could push up the average, even if other properties aren’t necessarily spending additional time on the market.

(JtR: The paragraph above is inaccurate, the DOM is calculated from listing date to pending date)

Short sales account for roughly 8 percent of all home sales this year, up from 7 percent in 2010, 5.5 percent in 2009 and 3 percent in 2008, according to CoreLogic.

Valone said the increasing share of short sales is also in part responsible for the softness in prices.  “We’ve been bumping along the bottom for a good year,” he said. “Look at housing market, and softness, has little to do with housing, has to do with larger macroeconomics.”

The market needs echo boomers — children of baby boomers — to leave the rental market and become home buyers, according to Valone.

As long as the labor market remains weak, though, they’ve opted for flexibility over building equity.

“People who don’t own now should be coming into the market with zeal, with good interest rates and prices, and instead they’re saying ‘I don’t know if I’ll be full-time employed in San Diego,’ so they want the flexibility that staying in the rental market affords them,” he said.

While some analysts’ predictions have surpassed the general forecast that prices won’t fall more than another few percentage points, and have suggested they could come down as much as another 7 percent, those losses still don’t represent a great deal of money in the long run, according to Valone. More than a fear that values are still on the way down, it’s a fear of the current labor market that’s keeping young would-be buyers on the wrong side of the fence, he said.

“Housing won’t lead us out,” he said. “Instead of it being the lead engine pulling the train, it’ll be in the back pushing the train.”

Through ten months, total home sales have slipped 3 percent from last year, when the homebuyer’s tax credit propped up sales early in the year, led primarily by a decline in condo sales.

County buyers have purchased 8,902 condos this year, down 8.3 percent from the year-ago period’s 9,709.

Meanwhile, 17,565 single-family homes have been sold this year, down less than a percent from last year’s 17,603.

The average days on the market for the entire year among single-family homes has increased 13 percent, from 74 to 84, while condos are now spending an average of 96 days on the market, up 14 percent from 84 during the first 10 months of 2010.

The median sales price of a single-family home sold this year, $368,000, is 4 percent less than the median home’s price last year. In the condo market, the median price has fallen 5 percent to $207,500.

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JtR’s research:

Now that there are so many companies reporting sales and pricing, the numbers tend to vary. 

I don’t know where CoreLogic gets their “8% of sales this year were short sales”.  Of the detached and attached home sales in San Diego County this year, the MLS shows that 21% have been short sales, and 23% have been REO sales.  

San Diego County sales counts for first ten months (1/1 – 10/31)

The shortage of reasonable-priced homes?  See below.

From HW:

Annual San Diego home sales hit a four-year low in September, Fidelity Pacific Real Estate said Monday.

Sales declined 4.6% year-over-year for the month and were also down 5% from August. That’s somewhat typical of a slowed demand moving into winter, though a larger increase than expected according to the report.

Home prices continued to decline, down 4.5% year-over-year.

Distress sales, which include foreclosures and short sales, made up about 44% of total sales in the area, and will likely cause prices to remain stagnant.

Housing inventory declined 9%, also relatively normal for the season, though this could be attributed to homeowners reacting to current price trends. Distress sales make up about 35% of active inventory.

Southern California home sales went up a slight 0.3% year-over-year in September, according to a report Thursday from DataQuick.

The preliminary sales and average-$-per-sf counts for September:

We’ve been on a consistent run lately – September Y-O-Y sales were identical in NSDCC, and the county’s sales numbers were close too. Here are the NSDCC detached monthly sales counts:

For those focused on pricing, here’s another angle to examine what’s been happening lately.

We’ve been worried that the higher-end homes would cause pricing squishdown, but there hasn’t been any obvious big drops lately.  The Case-Shiller Index for San Diego has given back almost all of it’s increase generated since 2009, but it’s in slow-motion, and the average cost-per-square-foot and median sales price measurements have their limitations too.

For example, here are Carlsbad and Encinitas detached sales (combined) between Jan-Aug:

2010: 918 sales, avg. $303/sf

2011: 929 sales, avg. $291/sf 

A simple look, and not alarming – a measly 4% drop on price with a 1% increase in sales.

But let’s check the average square footage to see if you’re get more for your money, and how the number-of-sales-per-price-range has changed using the same data:

These are fairly large sample sizes, yet the action appears to be going in opposite directions. The higher-end homes look to be getting smaller, but in the under-$500,000 group not only is the average square footage growing, but there are almost 2.5 times as many sales this year than last!

Carmel Valley’s highest-end category has had a 70% increase in sales YOY, but much can be attributed to the surge of sales in the $2 million-plus Rancho Pacifica. In 2010, there were only three sales in RP between January and August, this year there have been twelve!

The other CV categories are showing a little weakness, but with their smaller sample sizes there is more room for variance. But generally it feels like there has been some hesitancy in the Carmel Valley steamroller lately.

Generally, today’s buyers are getting more bang for their buck – and at mortgage rates in low 4%s!

In a great market, these year-over-year August numbers would look steady. Given the headlines lately, last month’s detached sales are remarkable, especially in the high-end areas. The low mortgage rates and limited REO inventory appear to be the answer to the government’s question – How do we create a bouncing-along experience?

The combined median prices for the entire county aren’t available on the MLS – listed on the last line are the average prices.

Even though the inventory of decent buys seems to get more bleak with every passing day, the number of closings have been holding up pretty well around North San Diego County’s Coastal region.

With all the commotion in the stock market, there is sentiment on Wall Street that now is a bad time to sell……stocks.

Don’t let that spill over to decisions about selling real estate around NSDCC – we need inventory!

Detached closed sales between August 1-15:

For those potential sellers who might think, “maybe I should wait until things pick up a bit”, let’s note that 30-year mortgage rates are now the lowest they have been in 50 years, and that the media will insist on pushing more economic drama. When Europe takes its next tumble, it’ll put a chill in the market here.

The preliminary count of detached sales around North San Diego County came in better than I expected. Once we add the customary 10% for the late-reporters, it’ll be right around June’s total.

Totals as of July 31, 2011:

The number of SD County detached sales will be close to June’s as well, once late-reporters pony up:

Below is the recent sales history for NSDCC.

We had 1,006 closings over the last five months of 2010, I’m guessing we’ll have about 900 more sales coming this year. (I added the 10% here to July’s current total of 201 sales): 

ocerenter noted two posts ago – could the foreclosure crisis be turning a corner?

I join in his skepticism, due to the numerous ways the data can be manipulated – primarily, we’ll never know how many defaulters are not being foreclosed.  The bankers can just let people live for free if they want, and the public won’t know.

In San Diego County, there are more REOs and short-sale closings, than properties being foreclosed (based on MLS vs foreclosureradar stats):

If anything, the liquidation flow indicates that the bankers have become better at managing the pipeline – as long as they keep it around 1,000 properties per month. At least they are providing some inventory!

But what about the shadow inventory? Will the underwater folks provide an unmanageable event for servicers in the future? Not as long as selling about 1,000 properties per month is acceptable to the bankers and investors. Defaulters will just have to wait in line!