Many times when real estate reports are released, the majority of the people just read the headline, and perhaps a sentence or two. Delving further into the article many times provide details that can either reinforce the headline or put an entirely different spin on it
DataQuick a real estate information service announced last week that home sales in San Diego County increased 4.2 percent in September, compared to a year ago, while San Diego home prices rose by 11.1 percent, year over year.
The median price of a San Diego home in September was $350,000, up from $315,000 in September 2011.
Unfortunately, the same report also showed that just a total of 17,859 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in September, . That was down 20.4 percent from 22,438 in August, and down 1.6 percent from 18,149 in September 2011.
Personally, I consider the number of sales to be a more important criteria then the movement in home prices. Back in the summer of 2005, I saw a similar divergent pattern (A Trend to Go National?). Keep in mind, that from about 2000 to 2005 here in San Diego, the home appreciation was running an astronomical rate of approximately 20% per year! Then, during the summer of 2005, there was a marked divergence between home prices, which continued to moderately increase, and home sales, which started, what was to be a multi-year decline.
So, with a 20.4% drop from August plus a 1.6% drop from September 2011, to me, this is definitely a red flag. But, how much of this is just a seasonal statistic is beyond my position as a California real estate broker to determine. Sure, going into September from the traditionally strong summer selling period, one would expect to see a decline in sales. It's just that a drop of 20.4%, to me, seems like a very large number!
Looking further into these numbers, it seems that there has been a shift away from the low-end of the market. More home sales towards the mid-to upper middle of the existing price ranges. This one factor alone, could be a major component to the increase in the September median San Diego home sales prices.
It's a given, that a month from now I'll be paying close attention to the October San Diego home sales figures. If these figures are also off substantially from September that would definitely be a second red flag and the possible sign that the San Diego housing market, and perhaps the US housing market is about to take a double dip.