How is Inflation impacting the San Diego Real Estate Market?

There are a lot of signs of a slowing housing market here in San Diego and a slowing economy nationally with inflation on the rise, gas prices, food prices, everything going up. How is that impacting the local housing market here in San Diego? Read more or watch the video to find out!

There’s a lot of doom and gloom out there as far as the housing market and inflation. And frankly, inflation is very drastic right now, and it’s certainly impacting myself and so many people and it’s definitely impacting the middle-class very, very strongly right now. How is that impacting buying decisions right now? A lot of the data for the news is reporting on right now is looking at past data. 

The data from March really is when that information is coming in and closed home sales in March are really homes that were pending in February and January. They’re looking at very, very old information. And what they’re showing us based on that is still a very drastic increase in median prices. And they’re going to be saying that for the next couple months, because they’re way behind.

Let’s dive in and actually look at what’s happening in this past month and how that’s kind of going forward. I don’t have a crystal ball as far as what’s going to happen in the next month, two months, etc.. But we can look at more current information. 

Key Metric #1 – Median Home Price

Right now the median price in San Diego actually fell from a high of $1 million in April to $990,000 in May, dropping $10,000. Now that’s not unheard of at all. In fact, if you look at just the past recent months in October, November, December, it was rising and falling and kind of bouncing around by $10,000 every single month. And that was at $850,000 median price, so a higher percentage of the median price.. 

And then we skyrocketed up to $1 million over the past four months. So a drop of 10,000, I don’t see that as a big deal. I do see a leveling off coming, I’ve been saying that. And even though we’re up 17.6% in four months from January to April, now it’s starting to level off and maybe drop a little bit. We’ll see exactly how this plays out if it continues to level off. If it drops more, we’ll see what happens but right now it’s basically leveling off. 

Key Metric #2: Final Sales Price to Original List Price

The final sales to list price is anotherbig metric that I look at so that looks at what was the home listed for and what did it actually sell for? That has fallen off a bit. We were up over 107% in April. We’ve fallen off to about 104.6% in May. Still homes are selling for over list price, but the median price is down. 

How does that work? How can the final sales to list price be 104.6% still over a hundred percent of asking, but the median price is falling? What’s been happening is sellers and agents are getting savvier and they’re looking at the market and they’re realizing we got a price lower to drive the price back up. 

That’s what’s happening is we’re still pricing a little bit under market and getting over list price and still getting that median price close to a million dollars. That’s why we still see bidding wars going on out there. And that’s the number one most important thing is getting as granular as you possibly can with buying a home or selling a home. 

You really have to look at your home. If you’re selling your home and look at the homes around you in your neighborhood, really, really compare it to other homes as far as what is your home look like? Does it have a lot of upgrades? Does it not? Because if you’re pricing your home just based on what the overall market’s doing, you can’t just throw a number out there anymore and you’re going to get it. 

You’re going to have to price very, very strategically to drive the best sales price for you. And conversely, if you’re buying, you have to again, look at each home and work with an agent who’s going to help guide you through what you need to do to get that home. 

Price Reductions & Bidding Wars are Occuring

There are homes that are having price reductions right now, absolutely! 

And those are the homes that you might be able to get a bargain on, but there’s reasons why they’re sitting on the market. It’s not because they’re highly desirable. There’s something wrong with the home or the community or the neighborhood. But if it’s a hot home that everyone wants, it has everything and it’s completely cherried out in this highly desirable, it’s still going to be super competitive. 

I just wrote two offers recently for different clients that we had to be very, very competitive over list price, waving some or in one case, all contingencies to get the home and it’s working. It just depends on the home and what is going on as far as if you’re going to have to be super, super aggressive with your offer, or maybe you don’t have to, but you also really want to take a look and say, “Hey, this home is sitting on the market. It is dropping in price. 

Do I really want to buy that home if it’s going to be hard to resell at a couple of years, because you’ve got a power line running through the backyard”, something like that that maybe people don’t really want. You really have to get granular on the homes and what’s going on with that particular home in order to buy or sell your home.

Curtis Chism, Realtor
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