Shadash has some ideas on why, but it is puzzling.
Why are San Diego prices ‘sticky’, compared to other areas that have seen more rapid depreciation, like Phoenix?
Clearfund said that he thinks Phoenix has bottomed, and Vegas is close, but fears that there is more pain ahead for SD.
Oceanside and other parts of SD County have seen 40% to 60% off peak pricing, and could probably be compared to Phoenix.
But what about the higher-end markets, will their day come?
The doomers will say it’s just a matter of time before the real estate crash/depression hits those higher-end sellers who have been reluctant to lower their price.
In Rancho Santa Fe, Del Mar, Solana Beach, and La Jolla there are 696 active detached listings over $1,000,000 currently, and only 327 have sold this year, averaging about 33 closings per month. In 2005, the average was almost double, at 61 per month. So far there have been twenty-eight million-dollar-plus homes that have closed this month in those four areas.
The cost-per-sf is mind-boggling too; in 2005 the solds averaged $717/sf, and this year the average is $665/sf, only 7% less.
You see over-priced junk not selling everywhere. Then a well-priced offering will come on the market and fly right into escrow. There are potential buyers waiting, if more sellers were realistic there would be more sales.
How do you explain it?
Specifically, why has the demand for SD higher-end homes been sustaining?
Some of my thoughts/ideas:
1. Big Money – 114 of the 327 million-dollar-plus closings were cash buys (35%). The percentage of cash buys in 2005 was 15%.
2. Attractive mortgage rates – B of A has 30-year fixed rates up to $1.5 million at 5.625% on it’s website today, at 0.875 points.
3. The uncertainty of tomorrow must be more challenging than the certainty of today’s low rates and lower prices (‘close enough’).
4. Our prices still looks cheaper to folks coming from S.F., L.A. and other richer markets.
Numbers 1 & 2 may be similar in other markets though, as are the dollar devaluation and parents giving money to kids…..could the great weather this year be a reason?
Could higher-end SD prices somehow find a way to stick?
What do you think?