Thursday, May 20, 2010

San Diego Real Estate Market, May 2010



At least once a week I read an article stating that real estate prices are going up, going down or staying flat. For example, here are two articles from the same newspaper but with different views May 11th, 2010 and May 18th, 2010; notice where their data comes from. I don’t take too much to heart when the article talks about the national market, as real estate like the weather is regional.

These articles are obviously written by non-statisticians that take data from places like Dataquick.com and Zillow.com and write a story with an eye catching title. I realized how just looking at data without analyzing it could give false information. For example, data for one year showed that the median condo price in Pacific Beach dropped 29% from the previous year. After looking into it I realized how this was possible. Most of the condos that sold the previous year had two bedrooms while the following year most of the condos that sold had only one bedroom. We all know two is better than one.

After this experience I learned not to pay much attention to the median value and to articles claiming one thing or another. Since I have access to all the data regarding the San Diego real estate market I’m able to compile and analyze the information myself. I have learned that the average price per square foot is a much better number to use to track the market and foresee trends as a whole. I have also learned that trends are easier to track using price ranges than locations. It works out that places like Rancho Santa Fe, Del Mar, Coronado, and La Jolla only have expensive homes so a look at the trends of million dollar homes is a good reflection of those communities.

Below is the data for homes sold over the last 14 months for three different price ranges. The graphs are Sold price per square foot over time.
LP = List Price, SP = Sold Price, DOM = Days on Market











It is very interesting to see the increase of home sales for the month of May 2010. This is mainly do to buyers delaying the closing of escrow until May so they can receive the California tax credit of $10,000 in addition to the Federal tax credit of $8000.

It is important to note that if prices drop by more than $3000 then it was a smart move to wait until the tax credit expired. This number comes from $8,000 x 25% plus $10,000 x 10% tax bracket.

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

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