While Kris is up in San Francisco hanging around the Inman Tech Conference seeking to find the proverbial better mousetrap, not to mention all the vendor freebees, I’m handling the more mundane tasks, such as analyzing current real estate theory and trying to determine which, if any, patterns may be shifting.
Global warming is thought to have caused melting of the ice pack, excessive rain in certain, typically dry areas and drought in areas where there should be rain, record high temperatures and protracted heat waves. Some of these shifting patterns have been well documented, while others remain speculative. But we know something is happening.
Similarly, we are experiencing shifts in our San Diego real estate market. The most obvious is the downturn in sales and prices after the unprecendented run-up since 1997. But might these trend shifts portend a pattern shift, as well? Traditionally (but not exclusively), the peak spring/summer sales season tapers off in many communities after August, with many, if not most buyers wanting to get settled prior to the new school year starting or in time for their summer vacation. The number of closed escrows usually drops off in September.
I looked back five years (per SANDICOR) in San Diego overall and Scripps Ranch in particular to confirm this and to get a better picture of the actual results. From 2002 through 2006 the average annual drop in closed escrows from August to September was 12.5% in all of San Diego County and 18% for Scripps Ranch.
So far my theory is validated. Here is where I will speculatively depart from the normal pattern, my own little global warming of real estate theory. Conditions today, including the general slow down in sales, the drop in sale prices and higher inventories are, in part a function of buyer paranoia. Buyers are out there and in surprisingly strong numbers. They are just sitting and waiting. We know this from both personal experience and from abundant anecdotal evidence. If I had a dollar for every time I was told by a perspective buyer at an open house that they are just waiting for the “right time” to buy, I could retire (almost).
Hence the potential pattern shift. Evidence and experience suggests many potential buyers have been specifcally waiting for the end of the peak selling season in hopes of scoring a better deal. The ”Canary in the Mine” will be the number of closed escrows in September (and possibly October). My bet is that there will be a substantial narrowing of the gap in the actual number of closed escrows (vs. August). If this does occur, it may represent a significant shift in the previously established pattern of sales in San Diego. Stay tuned. I’ll keep you posted..
ABOUT THE AUTHOR Steve Berg is Broker/Owner of San Diego Castles Realty. He is an awesome agent and an all-around great guy. When he is not dazzling clients, he contributes the occasional article here. 
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{ 9 comments… read them below or add one }
Steve you seem to be failing to take advantage of the lack of oversight from Kris. Though I suppose if the cat is away researching better mousetraps, the mice stay well behaved in her absence.
I think some of the seasonal nature of real estate is eroding in a general sense. So much previewing of homes is just done online that the real world schlepping around is reduced. For places of extreme hot or cold that likely smooths out the peaks and valleys of buyer interest a little. I mean looking at homes for 2 months in the snow is horrible, but getting it down to 2-4 tours is not so bad.
The summer vacation / school start dates and end of year festivals likely still have an effect though.
-Athol
Hi Sock Dude: Yes, with Kris away, I’m just not certain how far I’m allowed to go. I worry about being “moderated” from afar.
I agree that the seasonal nature of real estate seems to be softening all on its’ own with, as you suggested, a smoothing out of the peaks and valleys (well said, Sock) but there is this “feeling” I have about this fall, which is typically the slow season here, that it may be quite a bit more active than in the recent past. Of course, I could be wrong.
Steve,
It is a sad commentary on our life that your idea of partying while I am gone is to sneak in the illicit, unsupervised post. I thought by now the dancing bears and ponies would have arrived.
Tons of good information (or, at least, material) today. It is going to take me awhile to sift through it. Blog while you can.
Great article, I never even thought of putting global warming and real estate in the same sentence. And, I love the trulia map, I have been reading a lot about them!
Louisville – I like the Trulia map, too. Thanks! It is a little slow to load, and I can’t seem to get the thing to pick up all of our active listings (they seem to have something against University City/Clairemont), but I think it’s a great visual.
Louisville – Thanks. Kris, our resident techno-wizard gets the credit for adding the Trulia maps (not to mention the entire Blog package). I’m sure when she returns from the Inman conference, she will bring more new and exciting ideas to experiment with.
Steve – though not in the house side of the biz, my boss and I are exploring a long delayed move from my now infamous bachelor pad. Though it’s of good size, 3BR/2BA, it’s not the cool entertainment type home she’s wanted.
We just now started taking a look at what’s in store for us – I have zero idea of prices, trust me. We’re gonna stay in the East County.
I suspect you may have not gone far enough. You may find there will be historically high numbers of closings after Halloween. Wouldn’t that be scary?
Jeff – I would agree. We saw this last holiday season, but I felt it was premature to put it out in the public. We had a strong Nov., Dec., then a record 1st quarter. But things fizzled in the 2nd quarter. Just the opposite of what we were used to. Your timing may be impeccable. Good luck. Let us know if you need a 2nd opinion on anything.
Expect the request.