San Diego Real Estate Inventory is Dangerously Low

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The Real Estate Marketing Insider issues its comments on news that the inventory of properties for sale in the San Diego area is in freefall, and could threaten the recovery of the industry.

The Real Estate Marketing Insider offered its observations on news that San Diego County has a dangerously-low inventory of available homes, and is seeing rising home prices as a result; REMI worries that this is bad news for the housing market, which is still recovering to full strength and could face a serious setback should housing demand drop and drive prices back down. reported that from October 2011 to October 2012, the number of homes for sale dropped almost 35 percent. October marked the fifteenth straight month of falling housing inventory in the region. Meanwhile, the San Diego Association of Realtors reported that the year-over-year price change for single-family homes has increased 13 percent. Experts in real estate sales and marketing are saying that these two are related, and that the thin inventory base in San Diego is directly affecting the price medians.

The inventory shortage itself has multiple contributing factors. Many home buyers are concentrating their attention on neighborhoods near the coast, adjacent to San Diego’s beaches and San Diego rentals on the beach. The targeted demand in this area has likely driven inventory down. Also to blame are investors who, through market analysis, were able to predict the market floor and are buying up property in large numbers before prices rise. Because they pay cash and can often over-bid the asking price, home buyers are having more difficulty purchasing properties than usual. The single most important factor in dwindling inventory levels, though, is the spike in demand; with unemployment in San Diego down more than 2 percent from 2010, and mortgage rates at all-time lows, buyers at all financial levels are seeking to buy.

Experts forecast that San Diego’s inventory will continue to fall for at least the next few months, and that because investors are so quick to bid above home buyers, transactions above the asking price will become more common. REMI is worried, however, that thinning inventory and buyer frustration may combat the rise in demand, especially with the fiscal cliff potentially causing severe rises in tax levels. Should the housing demand drop precipitously and cause home prices in the region to plummet, San Diego may be due for another housing crisis.

The Real Estate Marketing Insider commented on news that San Diego’s housing inventory has fallen low enough to cause sharp rises in prices. reported that year-over-year totals of homes for sale showed a 35 percent drop in October; the inventory of homes for sale in San Diego has been thinning for 15 straight months.

The Real Estate Marketing Insider, based in La Jolla, CA, is an online publication providing real estate professionals with hot tips, news, and market trend analysis.

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