The Morning Report
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As with prices, San Diego home sales were up sharply in May.
The graph below shows that activity first dropped in April as people delayed closing to get into the tax credit double-dip window (as described in the prior entry on prices) and then surged by 17 percent once the window arrived. The window will remain open through June, so we should see another strong month in June followed by weakness in July as buyers pull their purchase dates forward to maximize their tax credit haul.
Despite the number of homes being purchased, inventory rose yet again in May. The increase was modest — under 3 percent — but this next graph shows that the sustained rise in inventory this year is unlike anything we saw in 2008 or 2009.
If supply keeps rising like this, the post-tax credit lull in demand (should the various tax credits ever end) could create some price weakness. But that is a possibility in the future. The incentive-laden reality as of now, or at least as of last month, is that prices are strong and homes are flying off the shelves.
— RICH TOSCANO