Are San Diego’s homes listed too high? One study thinks so

San Diego home sellers may have been too ambitious with their listing prices.

San Diego County homes are taking longer to sell and there are other signs buyers would rather walk away than make a purchase, said a new report from Orange County-based Reports on Housing.

The real estate research firm said as of September, 6,990 homes have been taken off the market compared to 3,478 last year. There are various reasons why a homeowner might decide not to sell, such as a change of heart about moving, but housing researchers see the data as an indicator of trouble selling.

“Many sellers in San Diego County have thrown in the proverbial towel,” said Steven Thomas, founder of Reports on Housing. “Life changing circumstances to pull a home off the market are the least likely reason that they are pulling their homes off the market. They are pulling their homes off the market because of lack of success.”

Thomas argued high prices and interest rates, still in the high 6 percent range, are pushing away buyers. He said last year, when there were fewer homes on the market, starting out with a wild listing price didn’t make much of a difference. With more homes for sale now, there just aren’t enough well-heeled buyers to bolster the market.

“There are only so many people that can afford a home,” Thomas said.

Bolstering his claim is that 34 percent of current listings have had their asking price reduced at least once. Also, the time it takes for a home to sell, called expected market time, has increased to 80 days, compared to 57 days last year. That figure includes all housing types — single-family, condo, townhouse — and all price points.

San Diego County saw its median home price in August drop $20,000 from its peak in May, said CoreLogic, to $875,000. There were roughly 5,200 homes listed for sale in San Diego County in August, said the Redfin Data Center. That was near the high point of the year, and up from about 3,000 at the start of the year.

Homes on the lower end of the price spectrum in San Diego County sell the fastest, but it’s still taking longer than last year. Homes under $750,000 were selling in an average of 71 days in September, up from 42 days at the same time last year. Properties from $750,001 to $1 million were selling in 68 days, compared to 44 days, and homes from $1,000,001 to $1.25 million sold in 71 days, up from 52 days.

The luxury end hasn’t been as affected, but it also represents less than 20 percent of the market, meaning a handful of sales greatly impact averages. Homes listed from $2 million to $4 million were taking 118 days, compared to 114 days last year. Homes from $4,000,001 to $6 million were 164 days, down from 221 days last year.

Raylene Brundage, an agent who sells in several North County communities, said she has had many awkward conversations with sellers over her 21 years in the business about not listing homes far above the market. She said most sellers are reasonable, especially when an agent gives them plenty of data, such as sale comps in the area.

Brundage said the toughest situation has been when a seller has greatly remodeled their home and thinks a buyer should pay more for their exquisite taste. She said buyers often don’t care about over-the-top upgrades and are focused on what other homes sold for in the area.

“It’s one of the hardest things to overcome,” she said. “It’s valuable to (the seller) but, when you customize it too much, that value is not going to translate to the next buyer.”

Brundage said she sold a house in 2010 in Scripps Ranch that had many custom features, including alabaster lighting fixtures. She said she checked in on the buyer a few weeks after the sale and he had piled all the alabaster in his garage — replacing them with lights from Home Depot.

There’s an economic principle that gets thrown around business circles that says, technically, all homes are affordable because someone is buying them. Thomas said that’s not how he would describe things.

“If that was true, there wouldn’t be any homes languishing for a long time,” he said.

San Diego County’s market has slowed slightly more than its neighbors to the north. Reports on Housing said 21 percent more homes in Orange County had been pulled off the market in the past year, compared to 101 percent in San Diego.

Orange County’s average expected days on market was 69 days, increasing from 54 days. That compares to 80 days in San Diego County, up from 57 last year.