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Housing report: South Bay

South Bay home sales increase more than 6% in Q2

Inventory undersupply looms throughout San Diego

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South Bay saw an increase in sales of 6.1 percent in the second quarter to 156 sales, according to Russell Valone, president and CEO at MarketPointe Realty Advisors, and the county may soon face an “inventory undersupply condition.”

The most active development in South County are Indigo II at Lomas Verdes, Terracotta at Lomas Verdes and Tapestry at Lomas Verdes, Valone said. Those developments generated the greatest number of sales during the quarter, which could be attributed to pricing, having the most supply or having a lot of inventory, he said.

Combined, the three developments sold 46 units, while 20 remain unsold and 49 remain for development.

There are five active developments in the Lomas Verdes community in Chula Vista. Fifty-nine units were sold in the second quarter, 29 remain unsold and 208 remain for development.

The Mosaic Development by Shea Homes in the Lomas Verdes community in Chula Vista sold nine units in the second quarter, eight remain unsold and 99 remain for development. There are a total of 216 units in the development.

Developer Shea Homes had nine active developments in San Diego County in the first quarter — five in Chula Vista, one in Black Mountain Ranch, two in Mission Valley and one in Encinitas. Fifty-five of the units were sold in the first quarter, 56 remain unsold and 334 remain for development.

“Buyers are looking for a home that can sell in 2012,” said Vanessa Linn, vice president of sales and marketing for Shea Homes San Diego. “They understand that rates are at historic lows, yet many feel they will stay low for a while.”

Buyers at Shea Homes are both entry-level and move up, and empty nesters are also entering the market and selling their homes, said Linn. Shea Homes has also seen buyers who have had short sales re-emerge and have bought and closed after the three-year waiting period to buy again, she said.

“Year over year, our sales and traffic has increased by 20 percent, and we have seen our cancellation rate decline,” Linn said.

Of the 2,797 units remaining for development in the county’s active housing projects, 24.17 percent, or 676 are in South County, according to data provided by MarketPointe Realty Advisors.

“I think we’re going to see inventory continue to decline in San Diego,” Valone said. “Going back to the first quarter in 1988, there has never been 3,000 units in almost 24 years. This is the lowest level that inventory has ever seen in San Diego County.”

The reason for the low inventory could be difficulties acquiring financing, and Valone said it’s likely San Diego County will continue to see inventories diminish.

“Where we were looking at almost two-and-a-half years of supply three to four years ago — in attached homes — and three years of supply for detached homes, it’s now 24 months for attached and 11 months for detached,” Valone said. “We’re running into an inventory undersupply condition. There’s less choice in the marketplace than six months ago.”

Twenty-five of the 118 active projects — those with unsold houses, units remaining for development or that sold units in the second quarter — are located in South County.

There were 734 new homes sold in the county during the year’s second quarter, 21.25 percent of which, or 156, were sold in South Bay.

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