Cheap Homes Selling Faster, But Not Anything Like Before

For a while I’ve been tracking a set of statistics that highlighted the great disparity between homes sales in higher-priced and lower-priced areas of San Diego. What we’ve been seeing for quite some time now is that compared to the expensive areas, the cheap areas had fallen a lot more in price but had experienced drastically higher sales volume on a year-over-year basis.

As of July, this disparity was still in place to some extent — but the gap had closed substantially.

Here’s how this particular study works. I take all the San Diego zip codes, throw out any that had fewer than 15 sales in July 2008 or July 2009, and order the remaining ones by how expensive they are based on the July 2009 median price. Then I average the year-over-year change in sales and median price for 20 most expensive zip codes, and then do the same thing for the 20 least expensive. (We all know that the median price has its problems, but I figure that by averaging together 20 zip codes we can at least remove some of the noise and get a decent read on what prices are doing).

The results are shown in the table below. To sum it up, the expensive zip codes saw a mild increase in sales and a minor decrease in price between July 2008 and July 2009. Over the same period, San Diego’s least expensive zip codes experienced a substantial rise in sales alongside a big drop in price. (More detailed data can be found here).

What’s interesting is that while the differences between areas are fairly dramatic, they are much less so than they were as recently as April 2009, the last time I updated this data. Have a look at the April version of the above table:

Between April and July, the year-over-year price change improved 6 percent for expensive homes (from negative 12 percent to negative 6 percent) while it improved 10 percent for cheap homes (from negative 34 percent to negative 24 percent). That brought the respective rates of price change a little closer together.

But the change in year-over-year sales volume was a lot more dramatic. The annual sales change increased 13 percent for expensive areas (from negative 5 percent to 8 percent) but declined a gigantic 58 percent for low-priced areas (from a 79 percent annual increase in April to a 21 percent increase in July). Here’s a visual take on the annual sales changes:

So while cheap areas are still selling faster on a year-over-year basis than expensive areas, they are doing so to a far smaller degree than they were earlier in the year. I’ll keep tabs on this data in the months ahead to see if the trend continues.

— RICH TOSCANO