Welcome to San Diego Blog | November 14, 2011

Downtown Market Velocity

Every quarter, I like to take pull the data to do market absorption rates in order to get a good overview on what is going on with the Downtown San Diego Real Estate Market. It’s that time again so here we have it.

Real Estate Downtown San Diego

I always derive something interesting from doing market absorption rates and it’s not always the same old story.  This time around, there is some note-worthy news for buyers and sellers of downtown San Diego Properties.  Here are some important facts that set up the foundation of what’s to come for downtown San Diego Real Estate:

Over the past 12 months, condo sales downtown have been dominated by sales below $450,000.  These have accounted for 74% of all downtown condo sales!  If you look at real estate inventory right now for both of the categories below included in this price range, you will see only 89 properties for sale. 

We have averaged 91 sales per month in downtown year to date so realistically we have less than a 1 month supply of what is selling well in downtown!  This is a little scary if you are a buyer or you are sitting in my shoes as an downtown property expert.

We have less than a 1 month supply of what is selling well in downtown! 

So what’s next?  We see the volume of sales dropping due to the lack of inventory.  It’s crazy, but there are a backlog of buyers waiting for good properties in this price range to come to market.  We hear talk of shadow inventory looming for foreclosures, but very few foreclosure properties have come to market and there are enough buyers in this $450,000 and below range to absorb those properties without pushing the market down.

  • Prime examples – the last 4 buyer’s we’ve represented on purchases at $450,000 or below have had multiple offers (3-7offers) where buyers had to compete with each other.  Yes, these were short sale and foreclosure properties, but that’s the bulk of what is for sale right now.

 

Price Range        
 $150,000-$299,999 Closed Sales in the past: 12 month 6 months 3 months
  Number of Homes Sold 338 167 79
  Average # Homes Sold per Month 28.17 27.83 26.33
  Current Homes Active on Market 38 38 38
  Months of Supply 1.35 1.37 1.44
  Days of Supply 40 41 43
         
 $300,000-$449,900 Closed Sales in the past: 12 month 6 months 3 months
  Number of Homes Sold 282 145 60
  Average # Homes Sold per Month 23.50 24.17 20.00
  Current Homes Active on Market 51 51 51
  Months of Supply 2.17 2.11 2.55
  Days of Supply 65 63 77
         
 $450,000-$599,999 Closed Sales in the past: 12 month 6 months 3 months
  Number of Homes Sold 134 67 34
  Average # Homes Sold per Month 11.17 11.17 11.33
  Current Homes Active on Market 39 39 39
  Months of Supply 3.49 3.49 3.44
  Days of Supply 105 105 103
         
 $600,000-$749,999 Closed Sales in the past: 12 month 6 months 3 months
  Number of Homes Sold 165 80 32
  Average # Homes Sold per Month 13.75 13.33 10.67
  Current Homes Active on Market 111 111 111
  Months of Supply 8.07 8.33 10.41
  Days of Supply 242 250 312
         
 $750,000-$1m Closed Sales in the past: 12 month 6 months 3 months
  Number of Homes Sold 63 30 10
  Average # Homes Sold per Month 5.25 5.00 3.33
  Current Homes Active on Market 48 48 48
  Months of Supply 9.14 9.60 14.40
  Days of Supply 274 288 432
         
 > $1m Closed Sales in the past: 12 month 6 months 3 months
  Number of Homes Sold 44 21 7
  Average # Homes Sold per Month 3.67 3.50 2.33
  Current Homes Active on Market 37 37 37
  Months of Supply 10.09 10.57 15.86
  Days of Supply 303 317 476
         
*All data is deemed to be reliable, but is not guaranteed.  Data pulled directly from Sandicor MLS

Opportunity for Properties in Downtown

The next real story is about where the best deals will be had.  The market below $600,000 is relatively stable and actually tightening up due to the lack of inventory and steady demand from buyers.  The market segment above $600,000 is a totally different story.  We have a 10 month supply on the low end to a 16 month supply on the high end.

In a market that is what I refer to as “the half century sale” because we won’t see San Diego real estate prices like this again in the next 50 years, the best buys are in the higher prices.   There’s more to chose from and there are less buyers competing for those properties.  I’ve seen amazing luxury condos with views to die for sell for $500/per sq ft or less this year.

 We won’t see San Diego real estate prices like this again in the next 50 years

When you start looking at West Coast Real Estate and luxury properties, real Estate in Downtown San Diego is laughably cheap.  We recently had some clients from the San Francisco Bay area come to Downtown to look at properties and we showed them a penthouse at Bayside.  We asked them to guess how much it sold for and their response was shocking.  They did the SF value in their head, made the discount for San Diego and derived an estimate of $5 Million! 

And the real answer- $2.65M…they couldn’t believe it and neither will you when you get here and see what you can buy for $700,000- $2.5M.  It’s a great time to purchase a property in San Diego…let us help you feel like you just stole an amazing piece of San Diego real estate too.  Like all good things, this “half century sale” will come to an end…don’t miss out- we don’t want you to be one of the masses saying, “hindsight is 20/20”. 

 Give us a call: 619-309-8011


Written by: chad

Categories: Absorption Rates, Real Estate Investment, San Diego Real Estate

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