Unsold Houses, Condos Reach Four-Year High

The inventory of unsold new housing in San Diego County has reached the highest level in four years, an indication that sales at subdivisions and condominium developments have slowed significantly.

Unsold houses and condos in the county totaled 3,265 units as of June 30, more than double the 1,557 units sitting unsold a year previous, according to Market Profiles of San Diego, a housing market research firm.

Although still far fewer than the record number of 6,768 unsold housing units in the county in September, 1981, the total is still the highest in four years, Market Profiles President Russell Valone said Monday.

Having many unsold units can prove disastrous to all but the financially strongest housing developers because of the large investment and high cost of financing that go into subdivisions. Several San Diego County developers went broke in the early 1980s when the recession caught them holding units they were unable to sell.

A growing inventory of unsold new houses is further evidence that the housing market is softening. The total of new houses and condos sold during the three months ended June 30 dropped by nearly 50% from the total unit sales over the same period last year, according to Market Profiles.

The slowdown in sales--and the bulge in unsold inventory--is attributable to high prices that are unaffordable to the bulk of new home buyers, Valone said. Growing economic uncertainty is also inhibiting home shoppers, he said, adding that more subdivisions are trimming prices and offering inducements such as appliances, landscaping and interior decorations in an effort to attract buyers.

The average price of a new house in the county for the second quarter of 1990 increased relatively slightly, to $262,214 from the $255,527 average price for the second quarter of 1989.

The average price of a new condominium sold in the county during the second quarter jumped to $187,328, up 40% from $134,602 in the same period last year. The increase reflects the successful advance-sales programs of several luxury condominium developments in San Diego and La Jolla, he said.

The resale market for housing continued to be flat, according to figures for July released Monday by the San Diego Board of Realtors, a trade group that represents brokers in San Diego, Chula Vista, La Mesa and El Cajon. Board members are involved in roughly half of all existing house and condo transactions in the county.

The average price for a resold house in July was $222,591, up 6% from the $209,125 of July, 1989, the board said. The median price of a July resale--the price at which half of all houses and condos sold had higher prices and half had lower--was $177,500, just 2% above the July, 1989, median.

Fixed-rate mortgages now feature an average interest rate of about 10%, down from 10.5% a year ago and down from an average of 10.375% in late June, said Dennis Casey, HomeFed Bank’s group product manager for retail and wholesale services. But the drop in rates has not caused a significant increase in demand.

Despite the drop in fixed-rate mortgage rates, Casey said, the bulk of buyers taking out loans at HomeFed are still taking out variable-rate mortgages, mainly because of low initial rates that make it easier for them to qualify for a purchase.