The real estate market in San Diego is exhibiting signs of recovery even in the face of 10% unemployment. Sales activity and prices are increasing. Our population in San Diego county increases by more than 35,000 each year even though an exodus of people continues. This seems primarily due to job losses in the building industry. Nonetheless, if we were trying to meet the needs of the growing population we should by all rights be building about 15,000 homes per year. In 2008 we built 3,725 homes. This year we'll build less than 2,000 and that's mostly multi-family and fire replacement homes.

Over the past decade statistics from the San Diego MLS show combined sales of single-family homes running about 2,872 homes per month. But now we are seeing home sales equivalent to the boom years of 99' to 05'. May 2009 produced 3,222 sales and June produced 3,678. When compared to historical trends, the market would appear to be well into recovery. If you're looking for the bottom of the market check your rear view mirror.

The very fact that prices are rising at a time when half the sales are distressed properties is in itself amazing and another positive factor. The long anticipated spike in foreclosures hasn't happened and we're keeping our fingers crossed. For the moment we are close to a balanced market with the ratio between listings and sales being about 2.5 to one. Fewer listings shifts the power from the buyer to the seller which is what we're trending toward. The median sale price per square foot is now $208 but the cost to construct a new home is closer to $300 per square foot and up.

MLS data is showing a shrinking gap between list price and sale price,  most likely because an over abundance of  buyers coupled with lack of inventory creates buyer competition and drives prices up. Anything in Oceanside below $300,000 gets at least 20 to 30 offers! One of the problems with this is that when prices go over market value appraisers have nothing to substantiate the comparables and often buyers renegotiate their purchase price downward with the seller. The banks won't lend on what doesn't appraise. So particularly in the lower ranges ($400 to $675) we are experiencing a huge demand with few available homes and prices are definitely rising. I'll keep you up to date as things change in the next news letter or feel free to visit my new website online soon at www.MickeySellsHomes.com.

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