In October we sold 2,745 homes in San Diego County. Inventory remains very tight at ~2.2 months of supply.
Median detached home values are up nearly 2% month over month and nearly 10% year over year. Though we anticipate a seasonal dip in home values, the only indication of any future home price correction in the data is a slight uptick in days on market from 18 days in September to 19 days in October.
Putting any seasonal home price weakness aside, the broader trend of fewer and fewer days on market, which began in January 2012 when home values bottomed, remains intact.
What is days on market? This is the number of days that it takes from when a property is listed for sale to when there is a meeting of the minds via a contract between a buyer and a seller. It is a useful leading indicator of home values, meaning that as it rises home values tend to fall in the several months that follow its rise, and as it falls, home values tend to rise in the several months following its fall. Intuitively this makes sense. In a hot seller’s market multiple offers are made quickly and are accepted quickly.
In a colder buyer’s market, offers take longer to materialize and reluctant sellers–sometimes to their detriment-hesitate to accept an offer below their expectations in hopes of holding off for something better. On average they are disappointed.
Buyer’s offer on multiple properties and purchase the home from the seller that is willing to accept a lower offer. Comparative sales prices drift lower. Reluctant sellers capitulate and the process repeats itself.
Bob Flynn, November 2016