San Diego's home market got better for sellers in September.
Around 19.7% of listed homes in the San Diego metropolitan area had a price reduction, said real estate website Zillow, down from 24.3% at the same time last year.
Price cuts are common in a down market and can be a sign of prices going down. At the start of this year, San Diego had the second-most price reductions in the nation. The latest numbers over the last few months have shown the region has largely returned to a market strongly in favor of sellers.
Of the nation's 20 largest metro areas, San Diego had the ninth most price reductions in September. Chicago had the most with 25.2%, and Miami with the least at 14%.
Zillow economist Jeff Tucker said the San Diego market has mellowed after a jump in price reductions — much like other high-priced markets — to the middle of the pack.
"The story with San Diego was reality setting in after prices had been rising unsustainably fast," he said. "That's where you get this mismatch of people's expectations and what they can really sell for."
Tucker said if pricing is too high it can mean taking longer to sell, and buyers can get worried something is wrong with the home if they see it has sat on the market for a while.
Across the country the market is a bit different with the nationwide average for reductions at 17.2%, Zillow said. That's up from 16.5% at the same time last year. Despite lower mortgage interest rates, which have been credited with energizing sales, it didn't correlate into slowing price reductions much.
Tucker said it's possible that lower interest rates may have had a bigger impact when they first dropped, but buyers and agents have become more accustomed to them now. So, interest rates might not provide as much of a boost now or in coming months.
The interest rate for a 30-year, fixed-rate mortgage was 3.61% in September, said Freddie Mac, down from 4.63% in September 2018.
Nahjla Wehbe Dipp, a Pacific Sotheby's International Realty agent, said buyers seem more receptive to not overpricing their homes than a year ago. She said another reason sellers might not want to reduce their asking price could be declining numbers of homes for sale.
Home inventory increased as sales started to slow last year around August, but any extra houses on the market seem to have already sold. There were 6,491 homes for sale in September, said the Greater San Diego Association of Realtors, down from 7,824 at the same time last year.
"There's just less for buyers to pick from," Dipp said.
The number of price reductions in a given month can correlate with a hot market. For instance, in San Diego County just 12.1% of listed homes had a reduction in 2016, and an average of 11.6% in 2017.
Even when a market is red hot, there are reductions. A selling tactic, not usually recommended by most real estate agents, is to price a home higher and then come down so the buyer feels like they are getting a deal.
San Diego still had the most reductions of any of California's large home markets. Riverside metro area had 16.5% of homes with a price reduction in September, followed by 16% in Los Angeles and 15.3% in San Francisco.
The median home price in San Diego County in September was $570,000, said CoreLogic data provided by DQNews, down from $575,000 at the same time last year.
