A Shifting San Diego Real Estate Market
We’re going to be covering what the San Diego Real Estate Market is doing, where it’s heading, how it’s fared in the past month.
*** CORRECTION in video on June Median price – $987,225 – I transposed the numbers when I was discussing the median price and stated $897K – Mistakes happen!***
Let’s dive first into what’s happening over all of course in the economy. We have rising inflation, everyone knows that. And interest rates have been on the rise. That’s certainly having an impact here in the San Diego housing market. That being said, interest rates actually stabilized in the past couple of weeks and they are probably about to rise again.
Buyer activity dropped off a bit and then picked back up again in correlation with those interest rates fluctuations. Really we’ll know what’s happening when the July information comes out, as far as what are buyers doing since the June data is really showing what buyers were doing in May and first part of June when the market wasn’t shifting quite as much as it is now.
San Diego was at a $1 million median price in April for Single Family Homes. That was up 17% since the beginning of the year. In May, we fell by 1% to $990,000. And then this last month in June, we fell by just 0.3% or about $2,700. We’re at $987,225 right now as a medium home price in San Diego county, we will see what happens coming up and I think we might fall again a bit in July.
The Days on Market really haven’t shifted, we’re at 20 days on market overall. This is consistent with what we’ve seen in the past couple years. We were just at 19 days last month, the lowest we ever got with I think was about 16 days on market. We’re still at 20. Any hot home is still selling fast over the weekend.
There are pockets of San Diego that are an extremely hot sellers market still. Ocean Beach, for instance, is an extremely hot sellers market. North Park homes are still very hot homes. It just depends on where you are at in the county. If get more Inland, it tends to start falling off a little bit, North County Inland as well.
You’re going to start seeing some price reductions in those areas. In fact, Redfin came out with a study recently we’re about 15% of the homes in San Diego have had price reductions. You’re seeing that a lot more commonly now as homes that maybe are not as desirable are being priced too high and, and coming down.
The Final Sales to List Price, which is a big metric I look at, that is what the home actually sold for compared to what it was listed for. That is still very strong. We’re at about 102% overall for the final sales list price.
Seller Strategies
Homes on average in the county are still selling for more than what they were listed for. It seems kind of counterintuitive that homes could be selling for more than they’re listed for considering the median price dropped a little bit. What we’re seeing is that sellers and agents are being a little more aggressive on their pricing in terms of pricing a little bit lower, getting the bid action on it and driving the price back up to get a good sales price.
That is a really the right strategy. If you’re looking to sell in order to drive a good price for yourself. If you start too high, it’s kind of like catching that falling knife and no one wants to grab that. You do not want to start high and then have to start price reducing, because you don’t know where the bottom is going to be for your specific house. It’s definitely more advantageous to price lower and then get that auction bid effectively and drive the price back up.
Buyer Strategies
If you are looking to buy, it’s really important of course, to watch what’s happening right now in the market. I think in the next 30 days, we’re going to have a lot better read on what is actually happening. Take a look at the homes you’re interested in and really try to figure out if there’s a lot of action activity on those homes.
How many bidders are actually coming out to bid on that home? How many buyers are actually wanting to buy that home and you have to craft your strategy accordingly. If you are looking to be in a hot area, then you’re going to still have to be aggressive. You’re still going to have to waive a lot of contingencies.
But if you’re going after a home that is in a softer market of San Diego, then you can be a little more aggressive with your bid strategy and what you’re able to do. You might be able to get credits from the seller now to help buy down your interest rate.
That is a great strategy.
If you’re going after a home that isn’t a softer market to help buy down your interest rates. Even though rates are high, you can still get a decent interest rate, by targeting maybe homes that are not quite as hot.
Adjustable Rate Mortgages
Also there are some other loan products out there. This is kind of a dirty word because of what happened in 2008, but the situations are completely different now, but is the adjustable rate mortgage. You may want to look into an arm and look at your options there. If you have solid equity, you have good credit, you have stable income and arm could be a really fantastic way to get at a really good interest rate and get a good deal on a home right now.
You can get interest rates around 4% right now, potentially even lower, over 10 years. They’ll adjust every 5 years up to a maximum of about 4% over 10 years. And that could be a really great way to get a good deal and a low interest rate. It’s kind of an alternative out there that a lot of people are looking into right now.
That’s an overview of the housing market here in San Diego. Again, I think that we’ll know a lot more come August once the information from July out and really see what people are doing. We’ll see if the interest rates keep getting ratcheted up. Right now the leading indicator for interest rates really is inflation.
If inflation continues on the rise, then inflation rates are going to rise to match that because banks need to make a profit. They have to lend out more than inflation.
Impact on Rental Prices
Also, if you are renting, rents are definitely on the rise. If you’re a landlord or renter, even with a softening housing market, everyone we’re talking to that own property, other realtors that are in property management rents are definitely on the rise with inflation and with interest rates going up, rents can be raised quite a bit up to the maximum rental cap rate, which is 10% right now in San Diego county.
If you’re renting, be careful because you’re going to be paying a lot more for rent very soon. If you are a landlord and you have a rental, you can probably raise your rent and be okay in terms of keeping your tenant in place. That being said too, if you are a landlord and you’re looking to cash out near the top of the market, whether we’re at the top or maybe slightly under it, you might want to consider that or be prepared to ride out.
Whatever happens here in the next few months, 1 or 2 years, depending on where things go. I think we’ll know in a few months what exactly is going to be happening.
Curtis Chism, Realtor
858-281-2568 | Mobile
mailto:info@sandiegohomes.io
Chism Team | DRE #02105113
brokered by eXp Realty | DRE #01878277
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