Buyers' Market vs. Sellers' Market – 4th Qtr 2010

In December of 2009 I wrote a blog that took 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 January 1, 2011. 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: 11,692
Contingent homes: 3135
Sold homes in last 30 days: 2177
Absorption rate of active homes: 5.4
Absorption rate of active and contingent homes: 6.8

North San Diego County
Active homes for sale: 4412
Contingent homes: 910
Sold homes in last 30 days: 792
Absorption rate of active homes: 5.6
Absorption rate of active and contingent homes: 6.7

Central San Diego County
Active homes for sale: 3512
Contingent homes: 825
Sold homes in last 30 days: 638
Absorption rate of active homes: 5.5
Absorption rate of active and contingent homes: 6.8

South San Diego County
Active homes for sale: 1770
Contingent homes: 932
Sold homes in last 30 days: 470
Absorption rate of active homes: 3.8
Absorption rate of active and contingent homes: 5.7

East San Diego County
Active homes for sale: 1317
Contingent homes: 387
Sold homes in last 30 days: 215
Absorption rate of active homes: 6.1
Absorption rate of active and contingent homes: 7.9


Up to $200,000 Homes
Active homes for sale: 2232
Contingent homes: 1101
Sold homes in last 30 days: 432
Absorption rate of active homes: 5.2
Absorption rate of active and contingent homes: 7.7

$200,001 to $400,000 Homes
Active homes for sale: 4437
Contingent homes: 1533
Sold homes in last 30 days: 1010
Absorption rate of active homes: 4.4
Absorption rate of active and contingent homes: 5.9

$400,001 to $600,000 Homes
Active homes for sale: 2248
Contingent homes: 391
Sold homes in last 30 days: 436
Absorption rate of active homes: 5.2
Absorption rate of active and contingent homes: 6.0

$600,001 to $1,000,000 Homes
Active homes for sale: 1581
Contingent homes: 160
Sold homes in last 30 days: 232
Absorption rate of active homes: 6.8
Absorption rate of active and contingent homes: 7.5

$1,000,001 to $1,500,000 Homes
Active homes for sale: 651
Contingent homes: 25
Sold homes in last 30 days: 57
Absorption rate of active homes: 11.4
Absorption rate of active and contingent homes: 11.9

$1,500,001 to $5,000,000 Homes
Active homes for sale: 844
Contingent homes: 22
Sold homes in last 30 days: 56
Absorption rate of active homes: 15.1
Absorption rate of active and contingent homes: 15.5

$5,000,001 plus Homes
Active homes for sale: 118
Contingent homes: 0
Sold homes in last 30 days: 3
Absorption rate of active homes: 39.3
Absorption rate of active and contingent homes: 39.3

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, which has been the trend for about the last six months. The 1st and 2nd quarters of 2010 were on the boarder between a seller and normal market. I expect a slow increase in homes priced under $500,000 while homes over $800,000 will continue a slowly decrease in price. There are many distressed homes but the banks are not in a position to recognize the losses on their books as they will become insolvent. Expect a constant and continual flow of distressed homes coming onto the market for the next several years.

Here are reasons to start getting serious about buying.
Historically low interest
Large inventory of homes, but less than during the summer
Cost of renting is going up
Depressed prices

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

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