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Flagging Numbers Show Faltering Market in San Diego

In California, one city is on the decline, with San Diego reporting an 8 percent drop in home sales year-over-year for the month of October.

[IMAGE] The ""survey"":http://www.fidelitypacificrealestate.com/San_Diego_Real_Estate_Market_Trends_October_2011/page_2487121.html from The Berkland Group notes that the shrinking housing numbers in the city didn't discriminate, affecting all price ranges, but having the greatest impact on the upper end of the real estate market among homes priced between $500,000 and $900,000.

Why did San Diego record such flagging home sales statistics in October? The organization behind the study says that the lowered mortgage limits hampered demand, causing the unwelcome shift.

The group stated that the October 1 reversion of the conforming loan limits from $729,750 back to $625,500, as stipulated by the ""Federal Housing Administration"":hud.gov/offices/hsg/fhahistory.cfm, was responsible for the data findings in San Diego. Offering further validation, The Berkland Group pointed to the decline in home pricing year-over-year during October for properties within the $600,000 to $800,000 range. Overall, home prices in San Diego declined by 3 percent year-over-year and remain about 35 percent below the market's peak pricing.

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In San Diego's South Bay and North County Coastal areas, sales dropped nearly 17 percent in October, while the remaining four geographic regions stayed flat or recorded less weighty losses. Foreclosures and short sales continued to play a role in the city's real estate picture, with 50 percent of sales attributed to the sector; it's also important to note that only 35 percent of homes on the market in San Diego fall into the distressed segment, indicating that purchasers are seeking out deals in the wake of the ongoing housing crisis.

Additionally, on the more conservative end of the market, homes listed under $400,000 made up around 68 percent of October's sales in the metro region. In fairer conditions, the pricing sector totaled only 36 percent of the market share in San Diego, showing that buyers' affordability levels are continuing to move downward.

Commenting on the results of October's survey, The Berkland Group noted in a company statement that, ""As long as prices remain off their peak,├âÔÇÜ├é┬áhomeowners who bought├âÔÇÜ├é┬áor refinanced at the peak can divest themselves only via foreclosure or short sale. Thus, distress sales will be with us for some time, which will continue to put downward pressure on home prices. Nothing short of robust demand and flat inventory will start to move home prices toward the higher prices of the past.""

Inventory and pending sales saw sinking numbers during the month, and the city's total inventory went down by 4 percent, while pending transactions declined by 7 percent. The Berkland Group estimates that San Diego's current supply of homes stands at around 3.8 months. By pricing category, inventory clocks in at 2.4 to 3.9 months for housing under $500,000, and it stands at a wildly variable 5.2 to 17.9 months for homes selling for more than $500,000.

About Author: Abby Gregory

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