With all the buzz about home sales in San Diego picking up, everyone has forgotten about the luxury market. There is a huge dichotomy between lower and higher priced market segments. In the luxury market, there are more homes for sale, less homes selling, more price reductions, more properties going off market without selling and more bank-owned and short-pay deals.
The number of homes for sale over $2million has increased significantly. With prices in lower price ranges having dropped considerably over recent years, the gap between the first-time buyer areas and the luxury market has become huge. Search San Diego homes for sale to see for yourself.
In another CMA that I did for Mission Hills, I found similar trends. What?s causing the buildup of homes for sale is that nothing is selling. I was amazed to find that only 2 homes have sold in Mission Hills for more than $1.4 million this year. This is in stark contrast to the last 5 years. You can view more stats on this at my Mission Hills real estate site.
When you combine a lack of sales (low demand) with a high number of listed homes for sale (high supply), it is easy to see how prices have been and are expected to continue to drop. The lower priced homes took a big hit in the last few years and this created a gap. Now the luxury market has to come down in price to close out that gap.
With very few homes selling, many listings are hitting their expiration dates and coming off market. When this happens, the seller has the option to relist with their old broker, try a new one, or simply not list their home anymore. In some cases, the homeowner is unable to go any lower on price without turning their sale into a short-pay. In this instance, if there is not a financial hardship, the bank will not allow a short-pay.
With such a bad economy and dwindling demand from buyers in the San Diego luxury market, we are seeing the occasional short-sale or foreclosure, which we never saw before this year. While this has been common in the lower price ranges, it is rare in the upper prices. As foreclosures, short-sales and other must sell listings (i.e. trust sales) enter the market, they will drive prices & home values down to the point at which buyers agree that the price is a fair value.
In short, it may be a great time to buy San Diego luxury homes, but not to sell them. With prices dropping and a lot of great homes to choose from, this is a great opportunity for those that are not feeling the economic pinch to prey off of other?s misfortunes. I predict that we will continue to see prices drop for 6-12 months.
Adam is a San Diego luxury specialist & marketing master. View a complete list of all San Diego homes for sale at his website or contact Adam for all your real estate needs.
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