The San Diego Residential Real Estate Market is down to one month of inventory in most price ranges for single family detached homes and down to three months of inventory for attached homes. Is inventory a "cause" or an "effect" or a little of both?
Anyone who is active in the market already knows that it is a terrible struggle to find a home for everyone from investor to first time homebuyer to move-up buyer looking for a conforming loan. And you may have noticed it has been getting more difficult as the summer wore on. Below is the months of inventory chart from the end of April. Comparing the two charts, you can clearly see how our inventories have shrunk over the last three months.
One thing I find striking about the two charts is that the detached homes up to $600,000 are now in a seller's market whereas three months ago you had to be less than $450K. The slow trickle of REOs has been, in my opinion, too slow. I suppose it would be nice if the rate of release should attempt to keep a stable inventory amount.
From a price bottom, we are clearly there. In fact, based on sales close dates, our bottom was March. If we consider 60-days from offer to closing, then we were really at the bottom in January.
Now... having said all that. You will also notice from the months of inventory chart that we should probably refer to our market in three parts. Below $600K, $600-800K, and $800K+ for detached homes. The $600-800K range is living within a "normal" market behavior at the moment. However, the upper-most end of the market is still clearly suffering (detached properties over $800K and attached over $600K). Not only is their pain not over, but the dooms-and-gloom people are (whether they understand it or not) are referring to this segment of homeowners who are soon (between now and 2012) to have their loans reset. For those with documentable income it won't be too bad, but for the self employed, it is going to be a bear.
Just as we cannot refer to a national temperature or a national housing market behavior, even in San Diego we have multiple components. One part of our market is very active / very strong. Another part is still weak and still expects more pain.
As far as the shadow inventory - it will only hurt us (at this point), if it gets dumped all at once onto our market. Baring that, it looks to me like single family _detached_ homes are going to remain strong at the low end. The attached homes and their HOAs are another discussion entirely.
FYI - I was just referred to a recent San Diego News Network article "Economist Sees Rebound for San Diego Real Estate Market." at: http://www.sdnn.com/sandiego/2009-08-18/business-real-estate/economist-sees-rebound-for-san-diego-real-estate-market
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