Low inventory and high demand are pushing the real estate market in San Diego County off the bottom, slowly.

Multiple offers on the best properties in the entry-level market are being fueled by investors. Interestingly, the investors are not flipping these properties, rather, they are renting them out.

Low inventory is here to stay for the next year or two. We don’t see that changing much in the near future for several reasons.

First, there is no new home building going on, which is necessary to relieve the pressure.

Second, many existing homeowners aren’t going anywhere. If they have good jobs here, where would they go? Plus, too many are still underwater and can’t sell.

Lastly, forget about phantom inventory. As of March, the banks owned about 5,000 properties in the county. That number includes homes AND condos. In April, there were about 3,100 properties sold. Even if the banks put all their inventory on the market at once, it’s only one seven weeks worth!

So, there it is. The market has reached bottom, but there probably won’t be a major move to the upside until employment starts rising.

MARKET STATISTICS

Sales of single-family, re-sale homes were up 7.9% year-over-year in April. This is the tenth month in a row home sales have been higher than the year before.

The median price for homes was flat year-over-year, which is a nice change from the previous fourteen months of prices being lower year-over-year. Much of this weakness in price is coming from the move-up and high-end markets. In the entry-level market, prices are firming.

The move-up market is moribund and we expect it to stay that way until prices start rising and homeowners get back above water.

Pending home sales, another good indicator of market movement, were up 41.4% year-over-year. That’s seventeen months in a row pending sales have been higher than the year before.

The market right now is all about momentum.

SALES MOMENTUM…

for homes jumped 0.5 of a point to +3. Sales momentum, which is a leading indicator, has been rising since July 2011. The effect on prices is now starting to be felt, albeit weakly

PRICING MOMENTUM…

Which had been on the down-swing the past sixteen months, moved upward in April, gaining 0.2 of a point to 5.4.

WE CALCULATE…

momentum by using a 12-month moving average to eliminate seasonality. By comparing this year’s 12-month moving average to last year’s, we get a percentage showing market momentum.

CONDO STATISTICS…

Condo sales were down 1.9% year-over-year.

The median price for condos dropped 0.1% year-over-year.

Pending condo sales were up 26.4% year-over-year.

This is an extraordinarily tough market for buyers. It’s important to be calm and realistic. If you don’t know what to do or where to begin, give me a call and let’s discuss your situation and your options.