Buyers’ Market vs. Sellers’ Market – 1st Qtr 2010

In December of 2009 I wrote a blog taking a look at the San Diego market so buyers and sellers would have a better idea on how to handle a purchase or a sell. The data gathered at that time was only useful for a short period of time because the real estate market is continuously changing.

Because of the popularity of this information I will be evaluating the San Diego real estate market on a quarterly basis. To learn how this information can be used visit my December 2009 blog “Buyers’ Market vs. Sellers’ Market”.

Absorption rate is used to determine the supply vs. demand of real estate. It is calculated by dividing the amount of inventory by how many properties are selling in a month.

1 to 4 months supply of homes is a Sellers’ Market
5 to 6 months supply of homes is a Normal Market
7 or more months supply of homes is a Buyers’ Market

The real estate market we are in today is not an ideal market to calculate the absorption rate because of short sales. When an offer is submitted to a bank on a short sale it typically takes 60 to 90 days to hear back and during this time the listing agent usually puts the property into a status of Contingency, which removes it from the actively supply count. In this state the property is not actively being sold neither is it in escrow. The following data is a look at the San Diego County real estate market as of April 5, 2010. First we look at San Diego County by geographic regions then break down the numbers by price.

All of San Diego County
Active homes for sale: 10,188
Contingent homes: 4576
Sold homes in last 30 days: 2532
Absorption rate of active homes: 4.0
Absorption rate of active and contingent homes: 5.8

North San Diego County
Active homes for sale: 4063
Contingent homes: 1460
Sold homes in last 30 days: 990
Absorption rate of active homes: 4.1
Absorption rate of active and contingent homes: 5.6

Central San Diego County
Active homes for sale: 3073
Contingent homes: 1119
Sold homes in last 30 days: 750
Absorption rate of active homes: 4.1
Absorption rate of active and contingent homes: 5.6

South San Diego County
Active homes for sale: 1155
Contingent homes: 1378
Sold homes in last 30 days: 480
Absorption rate of active homes: 2.4
Absorption rate of active and contingent homes: 5.3

East San Diego County
Active homes for sale: 1163
Contingent homes: 502
Sold homes in last 30 days: 225
Absorption rate of active homes: 5.2
Absorption rate of active and contingent homes: 7.4


Up to $200,000 Homes
Active homes for sale: 1740
Contingent homes: 1645
Sold homes in last 30 days: 595
Absorption rate of active homes: 2.9
Absorption rate of active and contingent homes: 5.7

$200,001 to $400,000 Homes
Active homes for sale: 2894
Contingent homes: 2204
Sold homes in last 30 days: 1092
Absorption rate of active homes: 2.7
Absorption rate of active and contingent homes: 4.7

$400,001 to $600,000 Homes
Active homes for sale: 2107
Contingent homes: 557
Sold homes in last 30 days: 539
Absorption rate of active homes: 3.9
Absorption rate of active and contingent homes: 4.9

$600,001 to $1,000,000 Homes
Active homes for sale: 1809
Contingent homes: 243
Sold homes in last 30 days: 307
Absorption rate of active homes: 5.9
Absorption rate of active and contingent homes: 6.7

$1,000,001 to $1,500,000 Homes
Active homes for sale: 813
Contingent homes: 45
Sold homes in last 30 days: 70
Absorption rate of active homes: 11.6
Absorption rate of active and contingent homes: 12.3

$1,500,001 to $5,000,000 Homes
Active homes for sale: 1022
Contingent homes: 34
Sold homes in last 30 days: 50
Absorption rate of active homes: 20.44
Absorption rate of active and contingent homes: 21.1

$5,000,001 plus Homes
Active homes for sale: 174
Contingent homes: 1
Sold homes in last 30 days: 3
Absorption rate of active homes: 58
Absorption rate of active and contingent homes: 58

Note: Small towns and communities far from the major populated areas were not used in the breakdown calculations of the county, which is why their sum does not add up to San Diego County as a whole.

It is easy to see that San Diego County is in a sellers’ market for the majority of the categories but compared to December 2009 it is moving toward a normal market. I don’t expect prices to rise as long as there are distressed homes on the market but once they are gone don’t be surprised to see prices jump 15% to 20% within a year.

Even though it is a sellers’ market there are still good reason to buy real estate now.

Historically low interest rates (There are predictions the Feds will raise rates about two more times in 2010)
Cost of renting similar to that of owning
$10,000 tax incentive for first time buyers or $10,000 for the purchase of a new home
Depressed prices

If you want to know the absorption rate of a particular area contact us at 877homes@gmail.com