San Diego home sales hold steady in November 2011

San Diego home sales
hold steady in November 2011

My headline is slightly different from the prevailing headlines of the day regarding San Diego home sales which say that they fell. Technically, they did, from 2,759 in October 2011 to 2,754 in November 2011. If my high school math skills from thirty years ago are correct, I believe five units is within the standard deviation, so I say that sales held steady.

Here are monthly sales going all the way back to January 2008:

If you look at the above graph and table, you can see that the lowest number of homes sold was in January 2008. That year was the beginning of an unparalleled price plunge where some homes lost as much as 50% of their value in just twelve months. As prices fell, investors rushed in, and as prices continued to fall, more investors rushed in, many of them with cash in hand. That resulted in market interference that propped up sales and prices.

Coupled with the Federal and State tax credits of 2010, there simply have been too many players in the real estate market. Now that the Federal and State governments are out of the market, and all the investor-type properties are long gone, the number of homes sold reflects the buying public that wants a home to live in, raise a family in, retire in, and perhaps even die in.

Some pundits think that because over 5,000 homes sold in one month back in 2005, that a healthy market demands that 5,000 homes be sold here each and every month. I think that's unhealthy thinking because a great majority of those homes sold in 2005 should never have been sold to the people who bought them. Many of those people bought with ARMs and "liar loans," a tactic which caught up to them when the extraordinary rise in home prices could not be sustained.

What can we expect in the next two to six months? I'd like to see us stay around 3,000 homes sold each month. I think that's what can reasonably be sustained using the average San Diego household income, and I don't see that rising too much in the near or distant future.

I also think that the military returning from two overseas wars will put some demand on the marketplace and we'll see some additional homes sold, maybe climbing close to 4,000 homes sold during some of the late Spring and early Summer months.

Unfortunately, the tens of thousands of returning military is another artificial influence on the market place, so don't expect the number of homes sold to stay at 4,000 once it reaches there. There are only so many returning military....

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