Does San Diego have a shadow housing inventory?
January 30th, 2010 Categories: Real Estate News
SAN DIEGO- I still hear quite a bit of chatter regarding the real estate boogieman known as
“SHADOW INVENTORY”. This boogieman is singlehandedly going to plunge the San Diego real estate into pricing depths never seen in this area and our fate rests in the hands of the evil banking empire patiently waiting to release this beast!!!
Me, I say turn on the lights of common sense and, while I have not been invited in to any boardrooms, I submit the following.
Take a look at the graph pictured. While from July 2008 to March 2009, foreclosures trended down in San Diego approximately 63%, number of homes sold, through data obtained from the Sandicor MLS, actually increased approximately 20% from a monthly average of 2500 to 2977.
Additionally, as reported in the San Diego Union Tribune, “listings since July have dropped 35.6 percent to 4,706 single-family resale homes, according to the San Diego Association of Realtors. Resale condo listings were down 45.4 percent to 2,571.” This is conspicuously close to the 34% drop 
in foreclosures in the same time period.
Lastly, in the Case-Schiller index, San Diego was ranked number four in home pricing increase out of their top 20 metropolitan markets and according to Dataquick, San Diego led the southern California region with a 10% gain in home prices over December 2008.
So, here is where my common sense kicks in, for better or worse.
Let’s say I’m a decision maker at a bank and I have an inventory of homes. We know 1) the federal tax rebate program is coming to an end and most likely will not be renewed a second time 2) listings are down over 30% 3) interest rates are expected to rise throughout 2010 4) pricing is up double digit in the market and 5) the San Diego market is showing stability and price growth in two indexes. My decision………. let’s sit on the inventory and see if the market conditions get better!!!
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