May 2007: San Diego Housing Market: single family attached and detached homes; The headline is simple, house sales decline further. Sales for May were 2,255, down almost 30% from May 06 and down 43% from May 05. Year-to-date sales of 11,181 are down 16% from the same period last year. We are seeing a progression in declining sales during a time when we should be in the peak selling season this does not bode well for the balance of the year. Pending sales for May totaled 2,616 which is an indicator that June performance will be similar to May. Inventory was 20,904, over 9 months supply.

The supply range for inventory varies by size of home with the lowest being 8 months and the high being 12 months. The supply is up 17% from last year and almost 100% from this time in 2005. Year-to-date listings totaled 34,431 which is inline with last years listing number but up 40% from the same period in 2005. Expired, cancelled and withdrawn listings totaled 17,382 up 224% from last years 7,763 and 525% from 2005. These numbers indicate how many times a home is re-listed before it sells or the sellers give up trying to sell.

The average selling price for May was $650,000 up 4% from last year. There are 3 factors affecting the average price calculation, sales mix by size, mix of detached and attached homes and neighborhood sales (i.e. coastal vs. inland, etc). This month we saw a change in the mix of detached homes rise to 67% from a normal 64%. This may seem small but the average price of a detached home was $745,000 vs. the average for attached at $442,000 so a small change makes a big difference. The over 3100 sq ft homes now make up 9.8%, a 22% increase, of total sales and with an average price at $1,500,000 this skews the average upward. The impact of these two factors appears to be in the 10% range, lowering the average price to $585,000. Remember that the neighborhood mix effect is not calculated here. The important thing to remember here is that depending on the size of the home the change in price varies to as much as a 10% decline year over year with some size ranges having price increases (Note: this does not take into account the neighborhood effect)

The San Diego market continues to be in accelerating decline and I am not sure where the leveling off point will be. The continuing problems of more restrictive lending practices and affordability are keeping buyers out of the market in large numbers. If sellers want to sell they must be aware of the pricing of their size home and neighborhood and price accordingly or they will linger on the market for long periods of time. Buyers need to be aware of the same factors and practice due diligence when buying to get the best buy.