San Diego, You Loser!

Well, you knew a headline like this would eventually appear here. It is, however, old news as local newspapers have had some of the latest DataQuick real estate sales data for about a week now and have been filing reports left and right about the one percent year-over-year median price decline in San Diego.

That's right, the median San Diego homeowner lost ground in the last year.

So much for the theory that real estate never goes down, though, with the average home still wildly overpriced at around a half a million dollars, who's really going to notice $5,000 here or there.

The charts maintained here for about the last year have been dutifully updated - a slight scale modification was required for the one directly below, as the red line finally crossed the old x-axis previously set at zero.

It has been adjusted to minus five percent, and the obvious question now is whether or not it will require further adjustment in the months ahead.


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It appears that Orange, Ventura, Los Angeles, and Riverside Counties are all having a meeting at about the eight percent level, perhaps trying to decide what to do, or maybe just feeling sorry for San Diego, wondering if they should send a sympathy card.

Of course, the decline in San Diego really wasn't that big a deal, unless of course you bought something a year ago with the intent to sell it this summer. In that case, instead of a 20 percent annual gain and a cool $100,000 profit, you're looking at a loss of well over $20,000 to unload the thing, that is, if you were able to sell last month - the early data for July does not look encouraging.

Looking at the median sales prices over the last three and a half years, there is nothing really unusual, save for the mostly flat red line.


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While it would be nice if DataQuick would also release inventory data to enable one-stop shopping for those who look closely at this sort of data, the sales volume in the chart below tells an interesting story all by itself.

The gray shaded areas include the months of March thru June for the last four years and high-volume Los Angeles County and low-volume Ventura County have both been removed in order to more clearly see the pattern traced out by the remaining counties.

The difference in sales volume from year to year can be clearly seen - San Diego dropping off dramatically while Riverside remains fairly steady. But importantly, sales volume for these four months this year actually declined from March to June in three of the four counties, the only county increasing over this period being San Diego, which is now experiencing some wild fluctuations.

Looking back over previous years, March to June declines in sales volume were very much the exception to the rule, the most recent four months likely being an indication of what's in store for the months ahead. When considering this sales volume trend, the current (and growing) inventory, and another interest rate hike or two, there's some serious downside potential for prices this summer.


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Real estate professionals are reacting to the data in a variety of different ways. What can you really say at this point? Put on a smile if you have to and we'll all see how this plays out in over the coming months - anything's possible.

However, the tone from DataQuick has changed somewhat since last year.

When referring to the multi-year run-up in prices last November, DataQuick President Marshall Prentice confidently predicted, "Home values have doubled in the past four years and almost all, if not all, of those gains are here to stay".

Well, for San Diego, the "all" option can now be ruled out, and from here on out it's a question of how much "almost" means.

Now looking at a one percent year-over-year decline to go along with the six percent drop from the peak in November, Marshall is now a little less sanguine, yesterday commenting, "We expect more markets to see prices flatten or decline a bit in the second half of this year".

Well, as long as it's only "a bit".