Buyers’ Market vs. Sellers’ Market – 2nd 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. Since then I calculate this data once a quarter.

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 July 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: 13,151
Contingent homes: 3948
Sold homes in last 30 days: 2446
Absorption rate of active homes: 5.4
Absorption rate of active and contingent homes: 7.0

North San Diego County
Active homes for sale: 5311
Contingent homes: 1196
Sold homes in last 30 days: 954
Absorption rate of active homes: 5.7
Absorption rate of active and contingent homes: 6.8

Central San Diego County
Active homes for sale: 4030
Contingent homes: 1002
Sold homes in last 30 days: 685
Absorption rate of active homes: 5.9
Absorption rate of active and contingent homes: 7.3

South San Diego County
Active homes for sale: 1622
Contingent homes: 1186
Sold homes in last 30 days: 486
Absorption rate of active homes: 3.3
Absorption rate of active and contingent homes: 5.8

East San Diego County
Active homes for sale: 1371
Contingent homes: 475
Sold homes in last 30 days: 263
Absorption rate of active homes: 5.2
Absorption rate of active and contingent homes: 7.0


Up to $200,000 Homes
Active homes for sale: 2085
Contingent homes: 1429
Sold homes in last 30 days: 521
Absorption rate of active homes: 4.0
Absorption rate of active and contingent homes: 6.7

$200,001 to $400,000 Homes
Active homes for sale: 4120
Contingent homes: 1875
Sold homes in last 30 days: 1118
Absorption rate of active homes: 3.7
Absorption rate of active and contingent homes: 5.4

$400,001 to $600,000 Homes
Active homes for sale: 2811
Contingent homes: 506
Sold homes in last 30 days: 492
Absorption rate of active homes: 5.7
Absorption rate of active and contingent homes: 6.7

$600,001 to $1,000,000 Homes
Active homes for sale: 2365
Contingent homes: 200
Sold homes in last 30 days: 307
Absorption rate of active homes: 7.7
Absorption rate of active and contingent homes: 8.4

$1,000,001 to $1,500,000 Homes
Active homes for sale: 908
Contingent homes: 45
Sold homes in last 30 days: 85
Absorption rate of active homes: 10.7
Absorption rate of active and contingent homes: 11.2

$1,500,001 to $5,000,000 Homes
Active homes for sale: 1210
Contingent homes: 36
Sold homes in last 30 days: 40
Absorption rate of active homes: 30.2
Absorption rate of active and contingent homes: 31.1

$5,000,001 plus Homes
Active homes for sale: 184
Contingent homes: 0
Sold homes in last 30 days: 6
Absorption rate of active homes: 30.7
Absorption rate of active and contingent homes: 30.7

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 normal market for the majority of the categories but compared to the 1st quarter data it is moving toward a buyers’ 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. Also don’t be surprised if interest rates start to increase after the November elections.

Here are reasons to start getting serious about buying.
Historically low interest
Large inventory of homes
Cost of renting similar to that of owning
Depressed prices

If you want to know the absorption rate of a particular area contact us at homes877@yahoo.com

Visit us at www.877homes.com