SAN DIEGO COUNTY
Market Overview a monthly real estate report | February 2010
2009 The Year In Review
What a difference a year makes. As poor as the
housing market was in January 2009, a year
of aggressive subsidies and sluggish economic
improvement has produced a tentative
optimism in January 2010.
The first-time homebuyer tax credit was
extended and revised in 2009 to include some
qualifying move-up buyers, and housing sales
in the conforming loan range began to soar in
most areas of the country by May 2009.
The job losses that had helped to swell
distressed home inventories appeared to be
easing by year’s end. In December, the Labor
Department announced that initial job loss
claims were the lowest since September 2008.
Instead of subprime-driven foreclosures, the
growth of distressed home inventories during
2009 was fueled by job losses. According to
Realty Trac, nearly 2.82 million homes, or one
in 45, were in some stage of foreclosure last year.
Four states — California, Florida, Arizona
and Illinois — accounted for more than 50
percent of those homes, with more than 1.4
million properties there receiving a foreclosure
notification.
Despite escalating job losses, the number
of home sales moved upward on improved
affordability, concentrated in the conforming
loan ranges. By the second half of the year,
housing inventories were declining from a
recessionary peak of over 11 months on hand
to a 6.5-month supply. (Housing supplies are
said to be balanced at six months of inventory
on hand. Below that level constitutes a seller’s
market, characterized by less inventory, more
buyers, and firm-to-rising prices. A market
with over six months of inventory is considered
a buyer’s market, with high inventory, few
buyers, and falling prices.)
First-time homebuyers made up an astonishing
51% of the market. (A typical figure is
40%.) That’s good news, because first-time
homebuyers drive housing markets, allowing
move-up buyers to act as well.
New Year, New Market
The only constant is change.
The November 2009 sales pace of 6.09 million
units sold was 44.1% higher than the 4.54
million units sold in November 2008 — but
that pace may not be sustainable without
continued low mortgage interest rates.
While interest rates still remain well below 6%,
the number of home sales is expected to continue
rising. However, prices still face considerable
headwinds. There will be a continued supply
of inventory from distressed homes, and
interest rates are expected to rise when the
government stops subsidizing mortgage-backed
securities in Q1.
With mortgage-backed securities purchases
by the federal government ending in February
2010 and homebuying tax credits ending in
April 2010, mortgage interest rates are already
beginning to rise above 5% for benchmark 30-
year, fixed-rate conforming loans.
In view of those facts, First American
CoreLogic’s LoanPerformance Home Price
Index predicts that home prices in 45 of the
largest metros will fall another 4.2% before
showing a modest annual gain by October 2010
The index calculates that prices will bottom in
March 2010.
The California Outlook
Unlike the rest of the nation, California has a
large amount of pent-up demand from buyers
who can now afford to buy a home. While
California will benefit from the tax credit,
housing sales here will also be supported by
historically low affordability.
The California Association of REALTORS®
First-time Buyer Housing Affordability Index
measures the percentage of households that
can afford an entry-level home in the state.
As of Q-3, 2009, the index was 64, meaning
64% of households can afford to buy an entry
level home using a one-year, adjustable-rate
mortgage as calculated by Freddie Mac. The
figure is down from 67 in Q-2, 2009.
Over 536,720 homes were sold in November
2009 across the state, up from 512,840 in
November 2008. The median price was
$304,520 — up 5.8% from $287,880 a year
ago, and happily well above the C.A.R.’s
October forecast.
Besides historically low affordability, why did
the number of home sales improve so much
toward the end of the year? Other key factors
included record low interest rates (4.88%
according to Freddie Mac for benchmark
fixed-rate 30-year loans); high volumes of
distressed housing (one-third of inventory sold
in November 2009), which impacted local
prices; and inventories falling below distressed
levels (4.5 months on hand) in the conforming
loan ranges.
Prices appear to have bottomed in many areas
and most price ranges below the conforming
loan limit. Dataquick, which uses county
records, reported that 102 of 362 California
cities showed higher median prices than
a year ago.
The major concern going forward is a possible
increase in foreclosure and short sale activity.
According to RealtyTrac, 632,573 California
properties received a foreclosure filing in 2009,
an increase of nearly 21% over totals for 2008.
The state did experience a four-month respite
– a decline that ended in December 2009
when foreclosure activity shot up nearly
9% over November. However, foreclosure
activity in Q-3 was down 17% from the
previous quarter, suggesting that the upturn
was a temporary spike.
That indicates that 2010 will not begin with
a dip in foreclosures. Mortgage insurer PMI
Group is braced for higher foreclosures,
according to David Berson, chief economist.
After falling 13% in 2009, he says home
prices will fall nationally another 5% in
2010, but will flatten by year end.
Freddie Mac Chief Economist Frank Nothaft
is slightly more optimistic, predicting
that home prices will fall 3% in 2010.
On a brighter note, he believes that mortgage
interest rates on benchmark conforming
loans (30-year, fixed-rate) will remain
under 6%.
Advice for buyers: Buyers should be aware
that as long as incentives are in place, home
sales in the conforming loan ranges will be
brisk. Get pre-qualified with a reputable
lender like HomeServices Lending powered
by Wells Fargo, www.hslca.com.
Keep mortgage interest rates in perspective
with home prices. The historical median for
mortgage interest rates is 9%, over three and
a half points higher than it is today. Home
prices are almost where they were ten years
ago in some areas of Southern California.
If you pay a higher interest rate now
than last month, remember you’re way
ahead on price.
Advice for sellers: Even though the market
is much improved, now is not the time
to slack off on presentation. The cleanest,
most up-to-date homes in the best condition
and repair will always sell for more
money than comparable homes with in less *A balanced market is widely
perfect shape. accepted as having six months
of inventory on hand with market
In the conforming loan range, be prepared conditions favorable to both buyers
for multiple offers, but don’t try to and sellers. A buyer’s market is
anticipate the market by raising the asking
characterized by conditions such
price beyond what can be supported by
as high inventories, falling prices,
local market comparable sales. Remember,
concessions by sellers, and
lenders are cautious and may decline your
buyer’s loan if they can’t justify your asking incentives among other indicators.
price. That will waste precious marketing A seller’s market has low inventories
time — and hurt your pricing if you end of homes for sale, escalating prices,
up having to put your home back on the and keen competition between
market because your deal fell through. buyers, including multiple offers.

San Diego County

San Diego housing is in a heated seller’s market*, with as little as 1.9 months of inventory on hand
in homes priced under $1 million. In homes priced above $1 million, selection is larger, but unique,
upscale and luxury properties aren’t expected to sell as quickly as more traditional homes. Between
$3 million and $5 million, inventories are high, averaging 22.2 months on hand, which isn’t out of the
ordinary in high-end homes. Homes priced above $5 million could be said to be in a serious buyer’s
market.

Detached homes stand alone and share no common walls with any other neighboring home. Attached
homes share at least one common wall with another home. The type of home ownership is determined
by whether or not it is a condominium, townhome, duplex, co-operative or other.
 Inventory In Months’ Supply – January 1, 2010
Detached Properties in SANDICOR MLS
Detached Properties - Inventory in Months

Under $300K 1.4

Detached homes are in a heated seller’s market in nearly
$300K - $399K 1.6
all price ranges. Homes priced under $400K are selling
$400K - $499K 2.2
as fast as they can be closed.
$500K - $599K 2.5
$600K - $699K 2.9
$700K - $799K 3.8
$800K - $899K 4.4
$900K & Over 11.4

0.0 5.0 10.0 15.0

Copyright © 2009, Real Data Strategies, Inc. All rights reserved. Use is by license agreement only.

Inventory In Months’ Supply – January 1, 2010

Attached Properties in SANDICOR MLS
Attached Properties - Inventory in Months
Under $300K 1.4
Detached homes are also selling briskly. Only when
$300K - $399K 2.1
prices go beyond conforming loan ranges are inventories
$400K - $499K 2.8
building.
$500K - $599K 4.6
$600K - $699K 7.7
$700K - $799K 6.9
$800K - $899K 9.4
$900K & Over 15.4

0.0 5.0 10.0 15.0 20.0

Pricing Reality For Sellers – January 1, 2010

Copyright © 2009, Real Data Strategies, Inc. All rights reserved. Use is by license agreement only.

List Prices Per Square Foot by MLS Status

DetachedDetached
PropertiesProperties
- Pricing Realty for Sellers,MLS
in SANDICOR per square foot

Active prices per square foot tend to always be much

Active $422 higher than sold prices when inventories are weighted with
unsold luxury homes.

Pending $227 Sellers should carefully consider

current buyer demand when pricing
their home for sale. When list prices
per square foot of Backup and
Pending status properties are below
that of Active properties, sellers
should ask for pricing counsel from
their Agent.
Sold $236

$0 $100 $200 $300 $400 $500

Pricing Reality For Sellers – January 1, 2010

Copyright © 2009, Real Data Strategies, Inc. All rights reserved. Use is by license agreement only.

List Prices Per Square Foot by MLS Status

AttachedAttached Properties
Properties in SANDICOR
- Pricing Realty MLS
for Sellers, per square foot

Lower pending prices than sold price per square foot

Active $437
suggest either price concessions or greater volume in
more affordable ranges.

Sellers should carefully consider

Pending $228 current buyer demand when pricing
their home for sale. When list prices
per square foot of Backup and
Pending status properties are below
that of Active properties, sellers
should ask for pricing counsel from
their Agent.
Sold $236

$0 $100 $200 $300 $400 $500

Copyright © 2009, Real Data Strategies, Inc. All rights reserved. Use is by license agreement only.
 Monthly Listings Taken and Absorbed
Detached Properties In SANDICOR MLS
Detached Properties - Monthly Listings Taken and Absorbed
12 Months
12 MonthsThrough
throughDecember,
December20092009
3,500 3,000
New Listings Listings Absorbed
3,000 2,770 2,500
New detached home listings have entered the market
2,500 2,339
2,506 2,526
2,587
faster than they can be absorbed, as sellers rushed
2,317 2,266
2,191 2,000
2,103 2,086 2,006 2,025 to take advantage of greater buyer activity. Since
2,000
1,500 reaching a top in October, new listings volumes
1,500
has dropped off, a positive sign for the market as
1,000
1,000 absorption rates are also declining.
500 500

0 0
2009/01 2009/02 2009/03 2009/04 2009/05 2009/06 2009/07 2009/08 2009/09 2009/10 2009/11 2009/12

New Listings 2191 2103 2339 2086 2006 2317 2506 2526 2587 2770 2266 2025
Listings Absorbed 1930 1934 2354 2331 2129 2151 2160 2139 2214 2144 1763 1662

Monthly Listings Taken and Absorbed

Attached Properties In SANDICOR MLS
Attached Properties - Monthly Listings Taken and Absorbed
12
12 Months
MonthsThrough
throughDecember,
December2009
2009
1,500 1,500
New Listings Listings Absorbed

1,196
1,233
1,199
New listings entering the attached home market are
1,167 1,152
1,059
1,116 1,139
also outpacing those being absorbed by the market.
954
1,000 911 964 956 1,000
Since reaching a top in October, new listings have
declined, a positive sign for the market as absorption
rates are also down.
500 500

0 0
2009/01 2009/02 2009/03 2009/04 2009/05 2009/06 2009/07 2009/08 2009/09 2009/10 2009/11 2009/12

New Listings 1059 911 1116 964 956 1139 1167 1152 1196 1233 1199 954
Listings Absorbed 769 835 1010 1065 1032 999 1108 986 1077 951 875 857

Listings Sold by Calendar Quarter

Detached Properties in SANDICOR MLS
Detached Properties - Listings Sold by Calendar Quarter
9 Quarters through December 31, 2009
9 Quarters through December 31, 2009
Average Sale Price (Thousands) Homes Sold
$700 8,000
Avg Sale Price Listings Sold Units

6,588 6,686
Average sales prices in detached homes appear to
$600
5,927
5,705 6,000
have hit bottom in Q1 2009, boosting sales volume
$500 5,360
5,897
that only began to level off in Q4 2009.
5,191
$400
4,000
$300
3,219 3,226
$200 $665 $592 $551 $498 $439 $393 $424 $449 $465
2,000

$100 1-year avg. price trend: Up 5.9 % 1-year sales trend: Up 3.4 %
2-year avg. price trend: Down 30.1 % 2-year sales trend: Up 83.2 %
$0 0

Listings Sold by Calendar Quarter

2007/4 2008/1 2008/2 2008/3 2008/4 2009/1 2009/2 2009/3 2009/4

Attached Properties in SANDICOR MLS

Based on data supplied by SANDICOR Multiple Listing Service and its member Associations of REALTORS, who are not responsible for its accuracy. Analysis dates are October 1,
2007 through December 31, 2009. Does not reflect all activity in the market place. Copyright © 2009, Real Data Strategies, Inc. All rights reserved.

Attached Properties
9 Quarters- through
Listings Sold by
December 31,Calendar
2009 Quarter
9 Quarters through December 31, 2009
Average Sale Price (Thousands) Homes Sold
$450 4,000
Avg Sale Price Listings Sold Units
$400
Sales prices in attached homes appear to have
$350 2,993
2,891 2,837 3,000 bottomed in Q1 2009. With prices down 32.8% over
2,589
$300 2,879
2,692 the last two years, sales trends are up 58.1%.
$250
2,226
2,000
$200 1,703

1,552
$150
$398 $370 $344 $311 $258 $229 $242 $253 $268
1,000
$100

1-year avg. price trend: Up 3.7 % 1-year sales trend: Down 6.9 %
$50
2-year avg. price trend: Down 32.8 % 2-year sales trend: Up 58.1 %
$0 0
2007/4 2008/1 2008/2 2008/3 2008/4 2009/1 2009/2 2009/3 2009/4

©2009 Prudential California Realty Independently owned and operated. Objective data used in this report provided by Real Data Strategies. Inc. Our company’s mailing materials are printed on paper certified by the
Forest Stewardship Council
Based on data supplied (FSC)Multiple
by SANDICOR as the
Listing product
Service and itsof sustainably
member Associations of managed
REALTORS, whoforests. An independently
are not responsible owned
for its accuracy. Analysis dates and1,operated member of the Prudential Real Estate Affiliates, Inc. This is not intended as a solicitation if
are October
2007 through December 31, 2009. Does not reflect all activity in the market place. Copyright © 2009, Real Data Strategies, Inc. All rights reserved.
your property is currently listed with another broker.