Glut of distressed properties in San Diego market
Affordability is causing a bifurcation of homebuyers in San Diego, as prices continue to drop throughout the metropolitan area. April home sales around the city fell 5% compared to the same month of 2010, according to Fidelity Pacific Real Estate, which released its monthly housing monitor Friday. Sales were up 2.8% from March. However, Fidelity Pacific said this change was much less than the average 7.5% gain usually seen between these two months. Home sales were concentrated in two main sectors — homes priced below $200,000 and homes priced more than $1 million. Fidelity Pacific said a large number of first-time homebuyers and investors are flocking to the reduced-price homes, while other homebuyers are taking advantage of steep price cuts on luxury homes. Fidelity Pacific said this type of affordability is a serious headwind to market recovery. "Almost half of sales are homes priced under $300,000. Sales of homes over $400,000 are well below the 2007 sales peak," the company commented. "Homes under $500,000 make up three-fourths of sales, although they are only 60% of listings." The median home price in San Diego last month was $321,750, according to DataQuick. Distressed sales are notably dragging prices down, as 47% of sales in April fell into this category, according to Fidelity Pacific. Distressed properties make up 35% of all housing inventory in San Diego. Fidelity Pacific expects the current downward sale and price trends to continue. "We don’t expect any significant changes to the current trends for this year," the company said. "Wild cards are unemployment, mortgage rates, and government intervention." Write to Christine Ricciardi. Follow her on Twitter @HWnewbieCR.