Compliments of
miguel nunez
san diego county
Market Overview a monthly real estate report | December 2010
A Normal Market Begins With Great Investments
It’s been so long since the housing market was
“normal,” it may be hard to believe it will ever
get there again. But according to the latest news
and economists’ outlooks, it’s on the way back
now. That means this is the best time to invest
in a home, while housing supplies remain high
and interest rates and prices are still low.
Housing supplies are at about eight months on
hand, comfortably drifting down from post-
tax credit surges during the summer. Actual
annual sales are at about 4.5 million, seasonally
adjusted. It would take about 5.2 million in
transactions to be considered “normal,” says
the National Association of REALTORS®
(NAR). If that seems like a lot of homes to
sell, consider that in 2005 transaction volume
reached $7.1 million.
Smart investors don’t wait for the bottom to
pass them by. While it may seem that buyers
have plenty of time, small shifts in sales,
prices, consumer sentiment and other market
conditions can produce big changes very fast.
Nationally, sales volume and prices are flat,
but that won’t last long in a post-recession
economy.
Consider the following:
Sales volume is already headed upward.
In September 2010, existing home sales rose
10% year-over-year and 17% over July after
sales plummeted as federal home buying
tax credits ended. In Q3 2010, half of all
metropolitan areas showed modest home price
increases year-over-year. New home housing
starts were also up in September, 12% ahead of
the previous year.
Foreclosure filings were down 4% in October
from September, according to RealtyTrac.
That’s good news for home sellers who have
been competing against the typically lower
prices of distressed homes.
858-481-1029 | miguel@nunezrealtors.com
www.nunezrealtors.com
Mortgage interest rates haven’t been as low as
they are now in over 40 years. In November
2010, mortgage interest rates were 4.25%, a
stark contrast to 9.5% in January 1991. While
consumers may believe low mortgage interest
rates are here to stay, they won’t last forever.
The median mortgage interest rate over the
past few decades is closer to 9% than 4%.
Jumbo mortgages are back, up 20% in Q2
2010 over Q1 2010. Says Texas A&M Real
Estate Center’s Chief Economist Dr. Mark
Dotzour, “The fact that the spread between
conventional loans and jumbos has narrowed
to very low levels means that borrowing costs
for higher priced homes is declining.”
Consumers are spending again. Like any other
pendulum swinging too far in one direction,
consumer sentiment can quickly swing the
other direction, causing instant spikes in retail
consumption and prices.
Consumer sentiment is improving, up 3%
in September according to the Corporate
Executive Board, while personal consumption
grew 2.3% year-over-year. Real disposable
income grew 1.6%. Consequently, retail sales
were up 1.2% in October over September – the
fourth consecutive monthly rise and the biggest
gain since March, according to the Commerce
Department.
Unemployment remained flat at 9.6% in
October, but the producer sentiment index
rose 5%, an indicator of an improving jobs
outlook.
Time to buy in California
Nationally, the road to normal has begun,
but the outlook is even more exciting for
California.
• California median house payments were
$1,747 in Q2 2010, down from $3,583 in
Q2 2007.
DRE# 01220521
• California median home prices were $375,000
in November 2010, up from $290,000 in
January 2010, and $225,000 in January
2000.
• California median rents were $1,484 in Q2
2010, up from $1,046 in Q2 2000.
• The gap between the average rental payment
and the average mortgage payment has not
been this close in the last ten years. If you can
buy, now is the time.
UCLA Anderson Forecast Senior Economist
Jerry Nickelsburg forecasts that “all the
evidence suggests that California is ever so
slowly coming out of the recession … but, slow
growth means that while the groundwork for
faster growth is being put down, there is not a
lot of perceptible change.”
The California Association of REALTORS®
expects housing sales to end 2010 with a 10%
decline in transaction volume from 2009, but
the trade organization projects a 2% increase
in sales in 2011.
However, softer transaction volume has not
resulted in lower home prices. The trade
organization anticipates that 2010 will end
with an 11.5% increase in median home
prices to $306,500, and that prices will further
increase to $312,500 in 2011.
“As the U.S. economy continues its tepid
recovery, we’ll see some improvement in
California’s economy,” said C.A.R. Vice
President and Chief Economist Leslie
Appleton-Young in September. “We expect a
net jobs increase of approximately 1.4 million
jobs in California for the year to come and an
improvement in unemployment figures.”
As the housing market stands now, sales are
brisk under $500,000, causing prices to rise.
Upscale home prices may soften further,
affording a terrific opportunity for home buyers
taking advantage of a three-year price decline
in certain price ranges, especially now that Overall, home values are still climbing, Advice for buyers: Market conditions
jumbo loans are more available. largely due to a lower percentage of constantly change. A buyer’s market with
foreclosed homes in sales inventories. low mortgage interest rates, high inventories
“The wild cards for 2011 include federal Foreclosures represented 34.7% of the resale and low prices seldom sees a bottom in
housing policies, actions of underwater market in October, down from 56.7% in all three factors. Overcorrecting prices
home owners, and the strength of the February 2009. The median home price in plummeted and began to recover two years
economic recovery,” says Appleton-Young. the Southland was $283,000 in October, up ago, so waiting for a better deal may not pay
“What is certain is that favorable home 1.1% year-over-year, and up significantly off, especially if interest rates start to rise.
prices and historically low interest rates from the $247,000 median paid in April A smart investor doesn’t expect to buy at
will continue to make owning a home in 2009. The median high was $505,000 in the bottom. Instead, look at all the market
California attractive for those who are in a mid-2007. conditions, and you’ll see the time is right
position to buy.” to strike a good deal on a home.
There is also a shift favoring lower-cost
Southern California opportunities homes. Worth noting is the role of investors Advice for sellers: Except in the affordable
Southern California home sales had a and second-home buyers, who purchased price ranges, it’s still a buyer’s market in most
normal seasonal drop in October 2010 from 21.8% of the homes sold in October and areas. That means competition is strong
September, according to MDA Dataquick, paid a median price of $204,500. Buyers from new homes, foreclosed homes and
but prices inched higher for the 11th who paid cash paid a median of $200,000, other homes for sale in your neighborhood.
consecutive month. A glut continues in the and accounted for 27.1% of the market. Get your home in pristine move-in
high-end upscale market, where home values That’s significant, since the 22-year monthly condition. Lower the price if inventory
dropped at half the rate of affordable homes average for Southland cash purchases is levels are over six months on hand. Be open
following the housing boom, despite the 14.2%. to negotiating terms with buyers. Consider
difficulty in obtaining jumbo mortgages. unique pricing models like Prudential’s
These savvy investors aren’t waiting for a Value Range Marketing®.
better deal, and neither should you.

san diego

San Diego County continues to enjoy a blistering seller’s market in homes priced under $1 million, but inventory
levels rise quickly once home prices reach the luxury ranges. While upscale homes aren’t expected to sell at
the same pace as more affordable homes, it’s clear that the upscale market $4 million and above is slow to
stagnant, with more than two years’ supply on hand.

*A balanced market is widely accepted as having six months of inventory on hand with market conditions favorable to both buyers and sellers. A buyer’s
market is characterized by conditions such as high inventories, falling prices, concessions by sellers, and incentives among other indicators. A seller’s
market has low inventories of homes for sale, escalating prices, and keen competition between buyers, including multiple offers.
Detached homes stand alone and share no common walls with any other neighboring home. Attached homes share at least one common wall with another
home. The type of home ownership is determined by whether it is a condominium, townhome, duplex, co-operative or other.

Listings Sold by Calendar Quarter

All residential properties in SANDICOR MLS
9 quarters List Price Range (Less than $1 million) through October 31, 2010
All Properties - Listings Sold by Calendar Quarter
9 Quarters through October 31, 2010
Average Sale Price (Thousands) Homes Sold

$500 12,000

Avg Sale Price Listings Sold Units

10,000
In homes priced under $1 million, sales prices were up
9,402 9,287
2.1% in Q3 2010 over the previous year. Sellers should
$400
8,983
8,636
7,913

take note that transaction volume is down 15.9% year-

8,000
$300 7,843 7,955
7,382 7,559
6,000 over-year, a possible precursor to flat or declining prices.
$200

4,000
$344 $309 $301 $325 $338 $337 $343 $351 $345

$100
2,000
1-year avg. price trend: Up 2.1 % 1-year sales trend: Down 15.9 %
2-year avg. price trend: Up 0.5 % 2-year sales trend: Down 12.5 %

$0 0
Aug-Oct 08 Nov-Jan 09 Feb-Apr 09 May-Jul 09 Aug-Oct 09 Nov-Jan 10 Feb-Apr 10 May-Jul 10 Aug-Oct 10

Based on data supplied by SANDICOR Multiple Listing Service and its member Associations of REALTORS, who are not responsible for its accuracy.
Analysis dates are November 1, 2008 through October 31, 2010. Does not reflect all activity in the market place. Copyright © 2010, Real Data Strategies, Inc. All rights reserved.
 Inventory in Months’ Supply – November 3, 2010
Detached properties in SANDICOR MLS

Detached Properties - Inventory in Months

Under $300K 3.5

Detached homes in the conforming loan ranges are in
$300K - $399K 3.2
a brisk seller’s market. Only when prices rise above
$400K - $499K 3.9
conforming loan ranges do supplies start to build.
$500K - $599K 4.4
$600K - $699K 4.3
$700K - $799K 4.9
$800K - $899K 5.0
$900K and over 11.7

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0

Inventory in Months’ Supply – November 3, 2010
Attached properties in SANDICOR MLS
Copyright © 2010, Real Data Strategies, Inc. All rights reserved. Use is by license agreement only.

Attached Properties - Inventory in Months

Under $300K 2.8

Attached homes are selling nearly as well as detached
$300K - $399K 4.0
homes in San Diego County, but sales volume eases once
$400K - $499K 5.0
prices reach $600K and above.
$500K - $599K 5.3
$600K - $699K 7.1
$700K - $799K 10.2
$800K - $899K 11.7
$900K and over 18.4
Pricing Reality – November 3, 2010
0.0 5.0 10.0 15.0 20.0
List prices per square foot by MLS status
Detached properties in SANDICOR MLS
Copyright © 2010, Real Data Strategies, Inc. All rights reserved. Use is by license agreement only.

Detached Properties - Pricing Reality for Sellers, per square foot

Sellers should carefully consider current buyer
demand when pricing their home for sale.

Active detached home prices per square foot are higher

When list prices per square foot of Backup
and Pending status properties are below that
Active $359 of Active properties, sellers should ask for

than solds, suggesting that most of the sales volume is

pricing counsel from their Agent.

occurring in the more affordable ranges.

Pending $247

Sold $250

Pricing Reality – November 3, 2010

$0 $100 $200 $300 $400
List prices per square foot by MLS status
Attached properties in SANDICOR MLS
Copyright © 2010, Real Data Strategies, Inc. All rights reserved. Use is by license agreement only.

Attached Properties - Pricing Reality for Sellers, per square foot

Sellers should carefully consider current buyer
demand when pricing their home for sale.

The gap between active attached home listings’ price

When list prices per square foot of Backup
and Pending status properties are below that
Active $351 of Active properties, sellers should ask for
per square foot and that of solds further underscores the
pricing counsel from their Agent.

brisker sales volume in the more affordable price ranges.

Pending $238

Sold $242

$0 $100 $200 $300 $400

Copyright © 2010, Real Data Strategies, Inc. All rights reserved. Use is by license agreement only.
 Monthly Listings Taken and Absorbed
Detached properties in SANDICOR MLS
12 months through October, 2010

Detached Properties - Monthly Listings Taken and Absorbed

12 Months through October 2010
3,500 3,000
New Listings Listings Absorbed
New detached home listings coming to the market
3,000 2,889 2,938
2,665 2,620 2,693 2,710 2,689
2,500
reached a peak in September. Fortunately for sellers, new
2,449
2,500
2,203 2,238 2,000
listings are declining, while absorption rates are ticking
2,000 1,705 upward.
1,500
1,545
1,500

1,000
1,000

500
500

0 0
2009/11 2009/12 2010/01 2010/02 2010/03 2010/04 2010/05 2010/06 2010/07 2010/08 2010/09 2010/10

New Listings 1705 1545 2203 2238 2665 2620 2449 2693 2710 2889 2938 2689
Listings Absorbed
Monthly
1604
Listings
1496 1670
Taken
1887 2196
and Absorbed
2394 1857 1946 1838 1961 1722 1828
Attached properties in SANDICOR MLS
12 months through October, 2010

Attached Properties - Monthly Listings Taken and Absorbed

12 Months through October 2010
1,800 1,500
New Listings Listings Absorbed

1,500 1,404
1,410
New attached home listings peaked in August. Absorption
1,348 1,350 1,200
1,271 1,321 1,294
1,336
rates have eased along with new listings being added
1,183 1,202
1,200
to the market. Sellers should carefully consider supplies
900

900
941
851 when pricing their home for sale.
600
600

300
300

0 0
2009/11 2009/12 2010/01 2010/02 2010/03 2010/04 2010/05 2010/06 2010/07 2010/08 2010/09 2010/10

New Listings 941 851 1183 1271 1404 1321 1202 1294 1336 1410 1348 1350
Listings Absorbed 894 856 877 972 1239 1256 963 993 991 978 906 904

Listings Sold by Calendar Quarter

Detached properties in SANDICOR MLS
9 quarters through October 31, 2010
Detached Properties - Listings Sold by Calendar Quarter
9 Quarters through October 31, 2010
Average Sale Price (Thousands) Homes Sold

$600 10,000
Avg Sale Price Listings Sold Units

$500
Detached home prices are up 6.9% in the year between
Q3 2009 and Q3 2010, but sales volume is tapping the
8,000

6,476 6,701

brakes on higher prices.

$400 5,994
6,863 6,000

5,538 5,746
$300 5,743 5,359
5,140
4,000
$200
$479 $414 $399 $453 $464 $474 $482 $485
$433
2,000
$100
1-year avg. price trend: Up 6.9 % 1-year sales trend: Down 17.2 %
2-year avg. price trend: Up 1.2 % 2-year sales trend: Down 10.6 %

$0 0
Aug-Oct 08 Nov-Jan 09 Feb-Apr 09 May-Jul 09 Aug-Oct 09 Nov-Jan 10 Feb-Apr 10 May-Jul 10 Aug-Oct 10

Listings Sold by Calendar Quarter

Attached properties in SANDICOR MLS
Based on data supplied by SANDICOR Multiple Listing Service and its member Associations of REALTORS, who are not responsible for its accuracy.
9 quarters through
Analysis dates are October
November 1, 2008 31,31,2010
through October 2010. Does not reflect all activity in the market place. Copyright © 2010, Real Data Strategies, Inc. All rights reserved.

Attached Properties - Listings Sold by Calendar Quarter

9 Quarters through October 31, 2010
Average Sale Price (Thousands) Homes Sold

$350 4,000
Avg Sale Price Listings Sold Units Attached home prices and sales volume have declined for
$300

2,911
3,036
3,000
two years, affording a great opportunity for home buyers.
$250 3,112
2,912
2,644 2,584 2,593
$200 2,498
2,428
2,000
$150

$100 $293 $250 $224 $247 $264 $251 $250 $254 $260
1,000

$50 1-year avg. price trend: Down 1.4 % 1-year sales trend: Down 11 %
2-year avg. price trend: Down 11.2 % 2-year sales trend: Down 16.7 %

$0 0
Aug-Oct 08 Nov-Jan 09 Feb-Apr 09 May-Jul 09 Aug-Oct 09 Nov-Jan 10 Feb-Apr 10 May-Jul 10 Aug-Oct 10

Based on data supplied by SANDICOR Multiple Listing Service and its member Associations of REALTORS, who are not responsible for its accuracy.
Analysis dates are November 1, 2008 through October 31, 2010. Does not reflect all activity in the market place. Copyright © 2010, Real Data Strategies, Inc. All rights reserved.
©2010 Prudential California Realty Independently owned and operated. Objective data used in this report provided by Real Data Strategies. Inc. An independently owned and operated member of the Prudential Real
Estate Affiliates, Inc. This is not intended as a solicitation if your property is currently listed with another broker.