The leper in the san diego real estate market this year is the luxury homes segment. We are currently experiencing a buildup of inventory, low sales volume, dropping values, high numbers of expired/cancelled listings, and an increase in short-sales and foreclosures.
Over the last year, there has been a steady increase in the number of homes for sale in the upper price ranges. I noticed this at the end of last year and the current stats are very concerning. Try doing an MLS search for San Diego homes at my website. Use one zip code like 92037 for La Jolla or 92103 for Mission Hills. Do different searches based on price ranges and you will see that there is a lot more for sale the higher you go in price.
Partial cause for the rise in homes on market is that there are very few sales occurring. While you cannot find a good online source for sold data, I have provided one for you in Mission Hills. If you visit my Mission Hills real estate website, you will see statistics outlying how sales over $1.4m have dropped significantly in the past 2 years.
Due to the buildup of inventory and lack of sales, we are seeing a resulting drop in home values in luxury markets. It’s a very simple supply vs. demand curve.
A large percentage of all expired & cancelled listings this year has been in the upper price ranges. We are seeing more and more expired luxury homes in San Diego that didn’t sell. Some come back on market and some just give up.
We are now starting to see short-pay deals and bank-owned properties listed in the luxury market segment. With properties having lost close to 20% of their value, there are more and more instances where a homeowner is upside down or simply loses their home to foreclosure because of bad economic conditions. These are must sell homes, so they are priced accordingly and are beginning to drive the home values in the luxury market, as they have in other segments over the past few years.
As you can see, the news for homeowners in our luxury markets is not good. Very few homes are selling unless there is a must-sell scenario. It will be these must sell scenarios that will continue to drive the prices down over the next 6-12 months.
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