House sales in San Diego continued to surge in October, with cash buyers still playing a big role in the local market.
According to Dataquick, the La Jolla-based real estate research firm, the county recorded 3,622 residential sales last month, up 31 percent from October 2011, and up 13 percent from September of this year.
Yet the inventory of available houses for sale hasn’t kept pace with demand, causing lots of buyers to make offers that are above listing prices, said local several real estate agents.
“The nicer properties that are priced fairly are getting a lot of activity,” said Rick Ungar, a broker with Casa Bella Realty Services in Carlsbad. “But it’s frustrating for a lot of financed buyers to get a house…Cash buyers are still active, and outbidding many of them.”
Dataquick said within the Southern California region, which includes six counties, cash buyers accounted for a near record, 32 percent of all sales. That’s about flat from September, but up from October 2011 when cash sales made up 30 percent of the total.
Affecting practically every market in the region is a dwindling number of houses to choose from, brokers said. In San Diego in October, the number of listings fell to about 5,300, down from about twice that number in the prior year’s October.
A Two Month Supply
That figure translates to roughly a two month supply here, Ungar said. Generally, if inventory is less than six months, it’s an indication that prices are rising, he said.
San Diego’s median sale price in October stayed at $350,000, the same as September, but was up 11 percent from the median in October 2011.
In addition to the basic supply/demand dynamic causing rising prices, another factor is a gradual increasing sales in move-up, higher priced units ranging from $300,000 to $800,000, Dataquick said.
Foreclosure sales, usually dominated by lower priced units, are declining as banks approve more short sales, those where the price accepted is below what is owed on the house.
David Tal, president of ShortSaleAgentFinder.com, said his short sales business, part of his San Diego-based brokerage, has assisted in about 2,000 short sales this year, with the most active states being California, Florida and Texas.
Instead of pressing defaulted borrowers and moving toward foreclosing on properties, large banks are moving to arranging short sales, Tal said.
“A lot of would-be REOs (real estate owned or foreclosed houses) are being turned into short sales,” he said.
Tal said he’s seeing a definite rise in buying activity as people realize that low mortgage rates (average 30-year fixed rate below 4 percent) can’t hold forever.
In some cases, buyers are definitely overbidding on certain properties, he said. “I’ve seen a few listings that got 15 offers within the first week, and half of those were over the listing price,” Tal said.
Flipping Trending Up
House flipping, or reselling a property within a short time for a higher price, usually after some refurbishing, is also on the rise, according to Dataquick. The report found sales of same units twice within a six month period made up 6 percent of total sales in October, up from 5.5 percent in September and 3.7 percent a year earlier.
Ungar represented one such flipper, who purchased a Carlsbad house earlier this year for $420,000. “After the buyer did some improvements, he put it on the market again, and recently sold it for more than $500,000,” he said.
The sparse inventory of houses along with certain properties attracting many offers are signs that the market still is abnormal, but the trends are encouraging, most housing observers said.
Jennifer Dubois, spokeswoman for Realtor.com, a residential search site based in Campbell, said her firm’s most recent report showed San Diego to be the 13th most searched area in the nation, a ranking it’s maintained for much of the year.
“In an average housing market, there’s about a six month supply, but in San Diego you have about a two month supply, indicating it’s not a completely healthy market yet,” Dubois said. “But it seems to be working its way to what people are calling the new normal.”