Wednesday, October 12, 2011

Buyers’ Market vs. Sellers’ Market – 3rd Qtr 2011

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 October 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: 11,141
Contingent homes: 3714
Sold homes per month over the last three months: 2841
Absorption rate of active homes: 3.9
Absorption rate of active and contingent homes: 5.2

North San Diego County
Active homes for sale: 4784
Contingent homes: 1143
Sold homes per month over the last three months: 1057
Absorption rate of active homes: 4.5
Absorption rate of active and contingent homes: 5.6

Central San Diego County
Active homes for sale: 3096
Contingent homes: 978
Sold homes per month over the last three months: 843
Absorption rate of active homes: 3.7
Absorption rate of active and contingent homes: 4.8

South San Diego County
Active homes for sale: 1502
Contingent homes: 1040
Sold homes per month over the last three months: 537
Absorption rate of active homes: 2.8
Absorption rate of active and contingent homes: 4.7

East San Diego County
Active homes for sale: 1112
Contingent homes: 448
Sold homes per month over the last three months: 315
Absorption rate of active homes: 3.5
Absorption rate of active and contingent homes: 5.0


Up to $200,000 Homes
Active homes for sale: 1987
Contingent homes: 1234
Sold homes per month over the last three months: 644
Absorption rate of active homes: 3.1
Absorption rate of active and contingent homes: 5.0

$200,001 to $400,000 Homes
Active homes for sale: 3864
Contingent homes: 1885
Sold homes per month over the last three months: 1298
Absorption rate of active homes: 3.0
Absorption rate of active and contingent homes: 4.4

$400,001 to $600,000 Homes
Active homes for sale: 2167
Contingent homes: 481
Sold homes per month over the last three months: 525
Absorption rate of active homes: 4.1
Absorption rate of active and contingent homes: 5.0

$600,001 to $1,000,000 Homes
Active homes for sale: 1806
Contingent homes: 174
Sold homes per month over the last three months: 318
Absorption rate of active homes: 5.7
Absorption rate of active and contingent homes: 6.2

$1,000,001 to $1,500,000 Homes
Active homes for sale: 687
Contingent homes: 28
Sold homes per month over the last three months: 83
Absorption rate of active homes: 8.1
Absorption rate of active and contingent homes: 8.6

$1,500,001 to $5,000,000 Homes
Active homes for sale: 819
Contingent homes: 27
Sold homes per month over the last three months: 62
Absorption rate of active homes: 13.2
Absorption rate of active and contingent homes: 13.6

$5,000,001 plus Homes
Active homes for sale: 147
Contingent homes: 3
Sold homes per month over the last three months: 2
Absorption rate of active homes: 74
Absorption rate of active and contingent homes: 75

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.

The San Diego County for the last six months has moved in the direction of a sellers market. This happened in the 2nd quarter because more homes were being sold but in the 3rd quarter it is because there are fewer homes on the market. In fact there are 1296 fewer homes being sold today compared to three months ago. A more and more frequent buyer these days is the All Cash buyer. These buyers are going after the less expensive homes making it tough for buyers who need a loan to compete.


The following reasons to get into the market are the same as last quarter with one addition.
Historically low interest still (for every $1000 borrowed the monthly payment will be about $6.50)
Cost of renting is going up
Depressed prices
All Cash buyers are investors and they typically invest wisely

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

Visit us at www.877homes.com