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...

Update on San Diego County new housing market

I recently finished updating a San Diego Market Monitor for Hanley Wood Market Intelligence, which is now available online here or by emailing clafemina@hanleywood.com.

Want to see an entire sample of a Market Monitor report? Click here.

Following is an abridged summary from the beginning of the updated report:

The good news for San Diego is that the existing home market is continuing to rebound, with sales increasing as homes become more affordable. The bad news is that the market for new homes continues to trend in the opposite direction, with sales declining as affordability dips back into the single digits based on the few units that sold during the final quarter of 2008. The primary reason for this disconnect is the level of foreclosures, which rose by another 23% during the third quarter of 2008 (the most recent data available) to 6,453 units.

The annualized rate of existing home sales rose by nearly 16% to approach 30,000 units during the fourth quarter, just 17% below the long-term average noted since 1988. Of course the reason for the rebound was a 12% decline in the median price to under $300,000 – a level not seen since the middle of 2002.

Although the current recession – deemed the worst since the end of World War II – was officially declared as having started in late 2007, since San Diego’s housing market started slowing earlier than that, it could rebound earlier than other parts of the country; in fact, many economists consider San Diego to be a bellwether for the entire stateStill, due to its past reliance on the housing market and consumer spending, the earliest rebound will not take place until at least late 2009 or early 2010.

Nonetheless, the strengths that have made San Diego County strong -- such as a great climate, steady defense contracts and deep connections to technology and the biosciences -- will continue to provide long-term, albeit delayed, advantages. In the short to medium term, however, the substantial fiscal crisis hitting the state government – which some experts think might result in a declaration of bankruptcy -- will undoubtedly have an impact on all regions throughout California including higher taxes, reduced services, or both...

For year end 2009, we expect the San Diego new home market to record a median detached sales price of $644,500, or a 12% decline from the $732,440 estimated for the end of 2008. The median per square foot value of detached homes is expected to finish the year at $200, down 12% from $227 at the end of 2008. Finally, local builders are projected sell 2,450 new homes in 2009, representing a decline of 84% from the annualized peak of over 15,000 sales in the third quarter of 2004.

Want to buy the entire 103-page report? Click here to order or contact Regional Director Catherine LaFemina at clafemina@hanleywood.com.

I'll also be down in San Diego on April 14th for the next Beacon Economics San Diego Forecast Conference, for which Hanley Wood is a sponsor. Want to register for that or find out more? Click here.