While investors and first-time buyers have been eating up all the homes for sale in lower price ranges, very little has been going on in the luxury markets around town. We are now starting to see: increasing numbers of active homes for sale, decreasing numbers of sales, decreasing property values, more failed listings, and an increase in bank-driven sales.

Over the last year, there has been a steady increase in the number of homes for sale in the upper price ranges. I noticed this at the end of last year and the current stats are very concerning. Try doing an MLS search for San Diego homes at my website. Use one zip code like 92037 for La Jolla or 92103 for Mission Hills. Do different searches based on price ranges and you will see that there is a lot more for sale the higher you go in price.

In another CMA that I did for Mission Hills, I found similar trends. What?s causing the buildup of homes for sale is that nothing is selling. I was amazed to find that only 2 homes have sold in Mission Hills for more than $1.4 million this year. This is in stark contrast to the last 5 years. You can view more stats on this at my Mission Hills real estate site.

As a result of the decreasing sales and increasing inventory, we are now realizing a noticeable drop in property values. When sales pick up, it will be more apparent where the property values are at, but in some markets, where there are so very few sales, it is quite hard to estimate where the actual value of a home for sale currently sits.

A large percentage of all expired & cancelled listings this year has been in the upper price ranges. We are seeing more and more expired luxury homes in San Diego that didn’t sell. Some come back on market and some just give up.

We are seeing more and more financial hardships for homeowners in the luxury market. With the economy down, many CEO?s and business owners are finding their earnings cut significantly. With a concurrent drop in prices, there is little equity for some to sell their home without bank approval. We are now beginning to see short-sales and bank-owned homes in the San Diego luxury market.

In short, it may be a great time to buy San Diego luxury homes, but not to sell them. With prices dropping and a lot of great homes to choose from, this is a great opportunity for those that are not feeling the economic pinch to prey off of other?s misfortunes. I predict that we will continue to see prices drop for 6-12 months.

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