Monday Morning Coffee

Final 2009 San Diego Home Sale Numbers

Januray 10, 2010

Good morning!

I hope you had a great weekend.  Last week was Week 2 of The Move.  Getting into our new office has been interesting.  We finally had internet up on Wednesday.  Phones are expected in sometime this week…  The highlight was sitting in the office at 4:30 on Wednesday and thinking the entire world behind me was on fire only to turn around and realize we have an exceptional sunset view.  Of course with my limited IPhone photo capability I had to post the picture on Facebook.  The lowlight was — the phones.

Looking at year end on a couple of levels, in the county, inventory remained tight at 3.1 months sales.  Closings were up 24% over 2008 and inventory was down 44% (sales for December and inventory at year end).  Breaking inventory down a little further and we find that:

• <$650k there are 2.2mos of inventory
• $650k – $800k there is 4.7mos of inventory
• $800k – $1M    there is 6 mos of inventory
• $1M – $1.5M there is 9.6 mos of inventory
• >$1.5M there is 2 years of inventory

This is consistent with the thought I have put forth that the market under $650k is being supported by the tax credit and the Fed buying MBSEs, both of which are set to end this spring.   There is now talk that the Fed will continue (or resume after a short break) purchasing the mortgage securities.  Even if they don’t, it isn’t likely that the <$650k inventory will rush out to 9.6 mos, but we could see total inventory slide to 6 mos and prices dip again.

Taking a more indepth look at my favorite neighborhood (4S Ranch due to a combination of factors that makes it a very good indicator for California + I live here), here are the quarter highlights:

• Attached
  •  Sales were up 300% over a year ago 40% over Q3.  This is easily explained as people were rushing to beat the previous expiration of the tax credit. 
  • Prices were 1-2% lower than a year ago but2-3% higher than the previous quarter.
  • 2/3 of all sales were distressed (foreclosures or short sales).  If such a high percentage were not distressed, we would have seen a significant price increase.
• Detached Condos
  • Sales up 80% in quantity over a year ago (small sample size)
  • Prices up 2-3% over a year ago.
  • 74% normal sales vs 74% distressed in the third quarter.
• Detached Single Family
  • Volume up 11% over a year ago.
  • Prices up on the smaller homes (<2750sf) by 12% over a year ago but basically even at larger sizes.
  • 28% of sales were distressed.

I am going to do more analysis later in the week, but my gut tells me that the tax credit and the mortgage purchases by the Fed have made about an 8-10% difference in the market this year.

Ok, that’s enough analysis.  One new home this week.  This is a 4 bedroom with an office and a synthetic putting green!  It is on the north side of 4S Ranch and just hit the market on Thursday.  Happily, this is not a short sale but the previous owners, Fiona and Scott, left town for a very solid east coast opportunity (my thought is solid like the block of ice they are going to have to chip off the windshield, but hey, I like my 63 degree winters).

I will have a 4550 sf short sale home next week and am working on a couple of smaller ones for later this month.

Enjoy the Coffee – this week is one you may have seen and probably have heard about, but it is a great reminder that you need to treat every client with courtesy and respect – especially if they play a guitar and sing.

                            A Lesson in Customer Service…

A musician named Dave Carroll recently had difficulty with United
Airlines. United apparently damaged his treasured Taylor guitar ($3500) during a flight.
Dave spent over 9 months trying to get United to pay
for damages caused by baggage handlers to his custom Taylor guitar.
During his final exchange with the United Customer Relations Manager, he stated that he was left with no choice other than to create a music video for YouTube exposing their lack of cooperation.
The Manager responded : “Good luck with that one, pal”.

So he posted a retaliatory video on YouTube. The video has since
received over 5.5 million hits. United Airlines contacted the musician and attempted settlement in exchange for pulling the video.
Naturally his response was: “Good luck with that one, pal”.

Taylor Guitars sent the musician 2 new custom guitars in
appreciation for the product recognition from the video that has lead to a sharp increase in orders.
Here’s the video …..

http://www.youtube.com/watch?v=5YGc4zOqozo&NR=1

Have a Great Week!

Scott Voak

858 688 0189

Monday Morning Coffee, San Diego Real Estate Market