San Diego home sellers are slashing prices

New homes under construction in Chula Vista's Otay Ranch development in April.

San Diego Union-Tribune

March 12, 2019 1:45 PM PT

San Diego County had the second-most home price reductions in the nation so far in 2019, said research from real estate website Trulia.

Price reductions are more common in the winter months, but San Diego County hasn’t seen as many cutbacks since 2014 when the market was still crawling out of the recession.

Twenty percent of homes for sale in February had a price drop, the most of any California city. At the same time last year, the percentage was 10 percent.

Felipe Chacon, economist at Trulia, said the reductions in San Diego show a shift toward better conditions for buyers but it’s not like prices are suddenly affordable for the majority of the region’s inhabitants. The median home price was $542,000 in December, said CoreLogic, up 2.5 percent in a year.

“The changes thus far have been modest,” Chacon said, “and aren’t quite the game changer some might be looking for after seven straight years of price appreciation.”

Home reductions have picked up nationwide in the first two months of this year. Tampa had the most home price reductions, 22.3 percent, out of the 100 metro areas studied by Trulia. San Francisco had the least at 8.1 percent.

Home price reductions are still common when the market is red hot. It is sometimes a selling tactic — although not usually considered a good one — to price a home higher and then come down so the buyer feels like they are getting a deal. But, the number of reductions recently shows a big change.

For instance, 8.5 percent of homes had price reductions in November 2016. In November 2018, there were 29.4 percent.

Jason Cassity, a real estate agent based downtown, said the industry has a problem shifting when there has been a big change — such as a downturn in sales at the end of last year. He said some agents are operating like there will still be a bidding war.

“If you continue pricing like it is 2016, it is going to sit on the market a long time,” he said. “Or you are going to be one of those 20 percent (in February) that have to price reduce.”

He said a lot of the reductions he has seen were listings marked up too high out of the gate, something a lot of agents could get away with for years. He said sometimes homes are priced overly high just to meet sellers’ expectation of a huge payday, not the actual value.

Cassity said he presents news articles about the real estate market to clients before they decide on what price they are going to market with.

Even with a reduction in prices, there is still a historically low number of homes on the market, said Mark Goldman, an analyst with C2 Financial Corp. There were 6,362 homes for sale in February, up from 4,636 at the same time last year, said the Greater San Diego Association of Realtors. That’s around 2.3 months supply for single-family homes and 2.2 months for condos.

A healthy market, not shifted too much in one direction for buyers or sellers, is around a six month supply, Goldman said.

“It is still a sellers’ market with inventory that low,” he said.

A few examples of price reductions:

3675 8th Ave. — This 2,660-square-foot craftsman home in Hillcrest went on the market for $1.1 million in September 2018, but had its price reduced 15 times. It is now on the market for $905,000.
4169 Balboa Way — This 1,408-square-foot condo in Clairemont went on the market for $525,000 on Feb.6 but had been reduced to $491,111 by March 11.
5370 La Jolla Blvd, Unit 203 — This 1,353-square-foot condo in La Jolla, two blocks away from ocean access at Calumet Park, was listed at $799,000 in November, but has had its priced reduced four times. It is now for sale for $719,000
210 Treasure Drive — This newly built 2,801-square-foot San Marcos home, with four bedrooms, started out at $829,900 but is now $799,900.
333 Orange Ave., Unit 9 — This 1,087-square-foot Coronado condo started at $725,000 in September, was raised to $775,000 in December, and then reduced several times back down to $725,000.
2165 Anthony Drive — This 916-square-foot single-family home near Shelltown went on the market in August for $389,000. The 90-year-old house was taken on and off the market before selling for $330,000 last week.