In November 2012, I sent a newsletter to my wonderful past clients with a San Diego Real Estate Market Update. In that article I explained the concept of absorption rate and how it relates to buying a home in San Diego County. I said in November that the Summer of 2012 was “crazy” but that things seemed to be slowing down a bit in the Fall. When I said, “crazy,” I meant that the inventory was becoming quite low, many homes had multiple offers and bidding wars, and it was getting more and more difficult to purchase a home, especially under $600,000. However, I noted to my clients in that article that it is very important to know the market you are in, because real estate is local! The absorption rate in one price range in one part of town may be very different from the absorption rate in a higher price range in another part of town. The key for home buyers is to do their research up front, so they know what type of market they are getting into. Should you be writing offers above list price on every home you like, or should you be writing low-ball offers and asking for the farm? It really depends on the market.
Anyways, it turns out that the Fall of 2012 may have been the calm before the storm. Inventory levels have been changing (some for the better and some for the worse), so I thought it was time to post an update. You may find it interesting to compare the absorption rates that I shared with my clients in November with the most recent numbers from April 2013. For example, in November I said that there was a five week supply of 1-bedroom condos in downtown San Diego under $500,000. That is a small supply (or absorption rate), and it indicates that people trying to buy those types of listings are competing against a lot of other buyers (and will see multiple offers on many properties, many selling at or above listing price, competing with cash buyers willing to pay list price, etc., etc.). Here is the update: since November, the supply has become smaller. We are now looking at a 4-week supply for downtown San Diego one-bedroom condos under $500,000. In a nutshell, it is even more difficult to buy in that market today than it was five months ago (and it was already tough back then).
As I mentioned already, every market is different. Not everyone wants to buy a 1 bedroom condo in downtown San Diego. I represent home buyers in many areas of San Diego in various price ranges (typically between $500,000 and $1,500,000, with exceptions). Below are the updates for the other areas and price ranges I wrote about in November:
· 1-Bedroom Downtown Condo Under $500K - Was: 5-Week Supply, Now: 4-Week Supply
· $1M-$2M Del Mar Home - Was: 4-Month Supply, Now: Still a 4-Month Supply
· $400K-$600K Rancho Peñasquitos Home - Was: 3-Week Supply, Now: 2-Week Supply
· $4M-$7M Rancho Santa Fe Estate - Was: 14-Month Supply, Now: 30-Month Supply
· Eastlake Home Under $400K - Was: 1-Week Supply, Now: Less than a 1-Week Supply
· $600-$800K Carlsbad Home - Was: 5-Week Supply, Now: 4-Week Supply
As you can see, the inventory is extremely low in some areas and price ranges and extremely high in other areas. Before you start looking at homes, it makes sense to sit down with a qualified professional (preferably a knowledgeable and experienced Exclusive Buyer Agent) to figure out the absorption rate in your target market and make a smart plan of attack for finding you the perfect home.
Justin Gramm is the founder and principal broker of Globella Buyers Realty, your San Diego Exclusive Buyer Brokerage. He also writes this blog, "For San Diego Home Buyers."
Exclusive Buyer Agents do not list homes for sale and never represent sellers. They have no "inventory" to try to sell you. They can represent you in purchasing any home. They are specialists at representing buyers only on the buyers' side of the transaction. Exclusive Buyer Agents work to get buyers the best price and terms when they buy a home.
If you have excellent credit and plan to buy a home or condo in San Diego County within 90 days, contact Justin Gramm to hire an agent on your side of the transaction. Call Justin at (858) 437-2662 or E-mail.
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