January Inventory Hits 12-Month Low; Prices Down Too

By Anna Nevares, Redfin San Diego Area Manager

With the number of homes on the market continuing a steady, month-over-month downward trend, it’s no surprise that buyers are willing to resort to tactics they would have scoffed at just a few months ago.

One tactic is accepting a back-up position and hoping the first deal falls through so they can snap up the home without having to re-negotiate. In years (and even months) past, buyers would rather wait for the property to come back available rather than committing into a back-up position. That said, it’s not yet a traditional seller’s market. Although there many buyers out there, they aren’t willing to pay premium prices when trends are continuing down. So sellers, price it right. Buyers, make a competitive offer, and know that it might take several offers before one sticks.

Inventory slide continues

The story in San Diego in January was all about buyers having less to choose from. The number of single-family homes in San Diego fell 8.2% from December and 36.8% from January last year, to 1,987.

Given the pace of sales and the number of homes on the market, it would take 3.4 months to sell through the current inventory, a term known in the industry as “months of supply.” In a market balanced between buyers and sellers, we’d expect to see 5-6 months of supply, so this represents a slight advantage for sellers in San Diego, but a more balanced market than December’s 12-month low in months of supply.

Sales drop nearly 28% in January

We’ve all heard that real estate is seasonal, and one look at the chart of the number of home sales reinforces that. There were 520 sales in San Diego, representing a sharp decrease of 27.5% since December 2011, but up 9.2% since January 2011. This is largely due to the fact that not many people are out looking for homes during the holiday season, and so there are less people ready to buy early in the year.

San Diego Median Sale Price Down Slightly for the Month, Year

The median sale price for a single-family home in San Diego was $370,000, down 0.5% from December 2011 and down 2.5% year over year from January 2011. The per-square-foot price was also down 2.9% month over month, to $234, and down 4.5% year over year.

Case-Shiller: Another Winter for Home Prices

It’s time for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). The Case-Shiller data is generally considered to be the most reliable measure of overall home price changes for a region, since they only consider repeat sales of homes when calculating their index, instead of looking at all the homes that sold in a given month.

For the full source data behind this post, hit the S&P/Case-Shiller website. For a more detailed explanation of how the Case-Shiller Home Price Index is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – November data is released in January).

Here are the basic Case-Shiller stats for San Diego County as of November:

Nineteen of the twenty metro areas tracked by Case-Shiller saw a decrease in their HPI between October and November (the same as between September and October): Only Phoenix saw an increase, for the second month in a row. This month Chicago bumped Atlanta out of the bottom spot, falling 3.4% in a single month.

Here’s a look at the latest local tiered data, back through 2000:

And here’s a closer look at the recent changes, with the vertical and horizontal axes zoomed in to show just the last year:

San Diego’s middle and high tiers fell in November, while the low tier rose slightly. Month to month, the low tier was up 0.4%, the middle tier fell 1.7%, and the high tier decreased 0.4%.

Also of note: Rich Toscano (San Diego’s famous local housing bubble blogger) bought a house! For real!

In this next chart, I’ve visualized the month to month trends of all twenty Case-Shiller-tracked cities. Green and above the horizontal axis if they were increasing in the month charted, red and below the axis if they were decreasing. I’ve excluded 2000 through 2004 since they looked largely the same as 2005 (mostly green).

Just five months ago, all twenty cities saw month to month gains. Now just one is not the red.

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