The Housing Chronicles Blog: San Diego Market Monitor for 1Q 2010 now online

Tuesday, June 8, 2010

San Diego Market Monitor for 1Q 2010 now online

Each quarter, I update the Market Monitors for San Diego County and the combined Los Angeles/Ventura County region for Hanley Wood Market Intelligence. Last week, I finished up the San Diego version, which you can purchase online here. I just finished up the LA/Ventura version today, which should be online later this week.

I also thought it'd be helpful to offer an excerpt from the Executive Summary for the San Diego report that's included at the beginning of the report:

Following last quarter’s 38% rebound as buyers began to take advantage of special tax credits, new home sales rose again by 21% during the first quarter of 2010 to 673 units versus the same quarter of 2009. And, even as prices began to slowly rebound, the combination of low interest rates and tax credits helped to boost average absorption rates by 69% to 1.7 sales per month per project. Looking ahead to the rest of 2010, however, the new home market is expected to soften slightly as the tax credits expire, discounted foreclosures remain as formidable competition and Option ARM mortgages continue to re-set.

In the existing home market, the rate of annualized sales rose by 9.4% during the first quarter of 2010 to 35,628 units. At this level, existing home sales are now just 1.5% less than the long-term average noted since the beginning of 1988, due in large part to a median price of $315,000 that is now 39% below the peak of $520,000.

At the same time, after last quarter’s 12% decline, median new home prices rose by 5.9% over the last year to $549,465. Although prices rose by 18% to $466,990 in the attached sector, they fell by just over 5% for detached homes to $597,900, with each submarket in both sectors performing much differently from each other during the quarter.

Somewhat surprisingly, in terms of relative strength, per-project absorption levels during the first quarter were actually highest in the East submarket (2.3 sales per month) and the Inland North (2.0), whereas the lowest rates were noted in the South Bay (1.0) and the Coastal North (1.7)...

Although higher affordability levels compared to new homes should continue to disproportionately assist the market for existing homes, given the weak economic outlook for 2010 and the expiring tax credits, the recovery for the new home sector will likely be slow and very gradual. In the short term, jobs in the existing and emerging technology sectors and hospitality industries are expected to rebound the fastest due to existing infrastructure and prior investments...

Looking to the end of 2010, the median detached new home price is still expected to reach $618,000 – or down by about 5% over the preceding year -- owing to a mix of smaller and more affordable homes, with the value ratio falling slightly to $206 per square foot. Sales are also still projected to fall by about 4% to 2,100 homes, or about 25% less than 2008 levels and 86% less than the peak in 2004...

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