Current Market and 2012 vs. 2013 Prices

In April, I compared the first three months of 2012 and 2013.  To recap, the number of homes sold increased by 7%, prices increased by 16%, and cash/investor purchases increased by 13%.  However, first time buyers decreased by 15%.

There are currently large investment firms buying residential property not only in the open market, but also on the courthouse steps and directly from banks, which are not in my calculations above. This is obviously not good for buyers, but is it good for the economy?  Articles from CNN can't answer this question either based on the links below.

3 reasons the housing recovery may not last             April 18

Home price rise continues to pick up speed              April 30

Home sales continue to climb                                    May 23

The market is tough for buyers in the under $500,000 price range as it is not uncommon for there to be 15 offers on a property and some offers being 5% over the asking price. To be more competitive buyers are waiving certain contingencies like the appraisal and inspection contingencies.

Since I like looking at numbers to see patterns, I pulled up some numbers from different zip codes for the month of May.  I looked at the number of homes actively being sold, homes in escrow, and the sold price per square foot.  I found it interesting that some zip codes have more homes in escrow than are actively being sold, and these tend to be in areas with lower cost per square foot.  These are also the areas that the investors are buying in.

The only other thing I can conclude from this data is that real estate is regional, so if there is a particular area you are interested in, let me know.

Location	Zip	Active	Pending	May 2012	May 2013	Price Increase
La Jolla	92037	249	131	$590	$599	1.5%
UTC	92122	50	71	$289	$351	21.6%
Carmel Valley	92130	136	109	$316	$374	18.3%
Del Mar	92014	99	44	$587	$590	0.5%
Encinitas	92024	125	114	$319	$382	19.6%
Coronado	92118	163	39	$626	$707	12.9%
Downtown	92101	186	120	$416	$474	14.0%
Point Loma	92106	42	32	$386	$460	19.1%
Santee	92071	46	105	$176	$195	10.4%
Poway	92064	103	101	$255	$284	11.2%
Mission Valley	92108	30	41	$206	$253	23.1%

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San Diego County Real Estate Market 2012 vs. 2013

There have been several articles released lately regarding the real estate market specifically how much homes has gone up. These articles typically use the median, which is the middle value. For example if one year four $300,000 homes are sold along with three $600,000 homes the median value is $300,000. If the following year three $300,000 homes are sold along with four $600,000 homes the median value is $600,000, which is an increase of 100%. Knowing this I don't believe the median number is good to use for real estate since every home is unique. The median number from one period of time compared to another usually show large changes in the market, which is probably why writers like to use it because is shows volatility.

I find using the average cost per square foot is a much more accurate number to use to show the direction of the market but it is not perfect as it does not take into account the size of the land. With this in mind I decided to look at the real estate market in San Diego County for homes sold in the first three months in 2012 and compared them to the first three months of 2013. Another criteria I used was to limit the price of the sold homes to under $2,000,000 for two reason. First, most people do not buy homes in the multi dollar range. Second, there was some anomalies in the high range of $12 and $14 million homes sold. The data comes from the MLS (Multiple Listing Service) and first time buyers are purchases that used a FHA or VA loan, which are loans that only first time buyers can use. There are some first time buyers who probably put down 20% but not many.

In the first three months of 2012 (7433) homes were sold. The average price per sqft was $220.23. Of those homes 2092 were purchased with cash while 2100 were first time buyers.

In the first three months of 2013 (7956) homes were sold. The average price per sqft was $256.27. Of those homes 2368 were purchased with cash while 1792 were first time buyers.

Using the price per sqft homes in the San Diego County market increased 16% in one year and purchases by investors also increased.

Encinitas, La Jolla and Downtown San Diego are areas that tend to have the most transactions so I looked at the numbers for those areas.

Encinitas
In the first three months of 2012 (126) homes were sold. The average price per sqft was $343.15. Of those homes 33  were purchased with cash.

In the first three months of 2013 (142) homes were sold. The average price per sqft was $383.41. Of those homes 39 were purchased with cash. An average increase in price of 12%.

La Jolla
In the first three months of 2012 (127) homes were sold. The average price per sqft was $508.61. Of those homes 51  were purchased with cash.

In the first three months of 2013 (153) homes were sold. The average price per sqft was $540.45. Of those homes 68  were purchased with cash. An average increase in price of 6%.

Downtown San Diego
In the first three months of 2012 (195) homes were sold. The average price per sqft was $377.11. Of those homes 88  were purchased with cash.

In the first three months of 2013 (219) homes were sold. The average price per sqft was $440.07. Of those homes 82  were purchased with cash. An average increase in price of 17%.


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