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.
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.
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.
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.
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.
All in all, due to all these issues with San Diego luxury homes and the economy as a whole, I fully expect continued drops in home values for this market segment over the next 6-12 months. I think it is a part of the natural cycle, which began with the lower-price ranges and is now working its way up to the segment that was relatively unaffected a year ago, but is now feeling the pain...
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.
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.
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.
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.
All in all, due to all these issues with San Diego luxury homes and the economy as a whole, I fully expect continued drops in home values for this market segment over the next 6-12 months. I think it is a part of the natural cycle, which began with the lower-price ranges and is now working its way up to the segment that was relatively unaffected a year ago, but is now feeling the pain...
About the Author:
Adam Pascu is a local 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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