San Diego Housing Market Forecast- May 13-19, 2022
It appears we are transitioning rapidly into a buyers market as available inventory has risen 70% in the past two months and new Pending sales continues to fall. We now have a little over 1 month of inventory available based which isn’t a lot, but we were at a 1/2 month supply of a homes just a couple months ago. That’s a doubling of the supply of homes in a very short time frame. The situation is like guerrilla warfare right now: It’s home-to-home and neighborhood-to-neighborhood. What I mean by this is, each home and neighborhood is experiencing it’s own unique factors as to whether it will sell above List Price, at List Price, or take a price reduction. We’re now seeing the more traditional factors that impact a homes desirability coming into play again. If a home has unchangeable characteristics like, it overlooks a freeway, has powerlines running over it, etc, then people aren’t buying and the homes are sitting. If they’re very desirable, then they’re selling for well over list price Curtis Chism, Realtor858-281-2568 | Mobilemailto:info@sandiegohomes.ioChism Team | DRE #02105113brokered by eXp Realty | DRE #01878277
Read MoreShocking News San Diego Home Prices | San Diego Housing Forecast
Home Prices The new median price just came out for San Diego County and we just hit $1 million as the median price in San Diego. It’s up $150,000 just since December and that is up 17.6% in just 4 months. Overall, year over year, we’re up just over 19% so we saw most of those gains occur just in the past 4 months. As hot as the real estate market was in 2021, the median price actually was relatively stable throughout 2021. And it’s accelerating as we’re in 2022 heading into the second part of Q2 here in 2022. That’s the median price for single family homes. Condos are now at $660,000 and that is up $75,000 since December or just over 12%. Now, year over year for condos, we’re up about 24% since last April. We’re seeing a little bit more of a slowdown in the condos happening first, as far as the overall price. I think some reasons for this is because people are basically getting priced out of the market. And normally what we’ve been seeing in the past fewmonths is more of a flight in the condos because that’s a little bit more affordable for people that can’t afford the single family homes. I think what we’re starting to see though now is that people are deciding they don’t want to buy a condo if they can’t buy a single family home. And they’re choosing to continue to rent instead. So I think that’s why we’re seeing a little bit of a slowdown first in the condo space. And that’s what’s going to happen is people are starting to drop out of the market because of interest rates rising and the house prices going up. Some people just cannot afford it anymore. Although Rents are rising, they’re not rising as fast as home prices and it’s becoming cheaper again to rent than to buy. Now over the long term, we all know it’s more expensive to rent than to own, since you never build equity in a home by renting. Mortgage Prices Now, we need to touch on mortgage prices, and it’s all over the news. The Fed just raised their target benchmark rate up one half percent and interest rates are up over 2% since the start of the year.What you could have bought for 3% interest back in January, you’re now going to be paying more like 5.5% here in May for that same house. If you were trying to buy a home that was $750,000, 4 months ago, that same home is closer to $900,000 with higher interest rates. Your mortgage payment just went up about $2,000 a month. That’s what’s dropping a lot of people out of the market right now. And again, people are choosing to rent instead of buy, instead of going into a condo space, cause they really don’t want a condo. If they’ve got a family, maybe a condo is not such a great solution for them. Bidding Wars on Homes Intensifying Another super interesting data point that I look at is the final Sales Price to the Original List Price of the home. If the home is listed for $900,000, what did it sell for? Did it sell for $900,000 or did it sell for less or or for more. The average final Sales toList Price is 107%. Again, we’re seeing this number accelerate. We were sitting around 102%-103% at the start of the year and starting February, it went to about 104% and thenin March it went to to 106.9%. And then now we’re at 107%. Bids are getting more and more aggressive, most likely people trying to get into a home before interest rates rise even more. We’ll see what happens as we head into May and June. The summer months, traditionally are very strong selling seasons. I think we’re still going to see very strong prices, but I think you’re going to start seeing homes go for potentially not quite as far overbid price heading into the back end of summer, especially. The summer months here coming up are still going to be very aggressive. I’ve been involved in some bids where they went $300,000 over on the list price. Again, very aggressive and that data is not going to show up until May. Inventory of Homes is Rising And finally, we look at inventory. We’re at 2,520 Homes for Sale right now in the County of San Diego. That’s actually up significantly the first 3 months of 2022, we were sitting around an average of 1,700 homes. We haven’t seen 2,500 homes for sale in San Diego since October of 2021. Now that being said, we’re still down overall inventory from last April of over 20% and the closed sales as also down 20% from last year. Overall, there’s less activity in the market, but the homes that are selling are selling fast just 19 days on market, which has been holding pretty steady for the last few months. So selling very, very rapidly, any hot home is selling in the first weekend. Cash Offers are Ramping Up I was actually just involved in setting up a showing for a buyer and we were going to look at the house and it was on the market for less than 2 days and they got an offer. They could not refuse and took it. We couldn’t do the showing. People are getting aggressive and they’re still buying as rapidly as possible. I’m seeing a lot more cash hitting the market. A lot more cash offers are coming in on listings, especially the listings that I’ve had recently. Usually, I would have one cash offer. Now I’m getting 3 or 4 cash offers. Sometimes from investors, but oftentimes from individuals that are looking to buy for their family, Multi-generational Buying I’ve seen a couple of situations where it’s been this multi-generational buying, where a grandmother is buying for a son or grandson. Overall in the market, we are seeing institutional buying take place as well, where large institutions are coming in and buying in the market as well. I personally have not seen that too much on any of my listings or the transactions that I’ve been involved with. But overall that’s still occurring and that’s going to keep the market up as well as large institutions are pouring their money in looking for those high rents, very stable returns that they’re not getting to the stock because as you know, stock market keeps getting hammered. Overall it’s super interesting news with the medium price, hitting a $1Million and how’s it still selling for well over list price. Again, I think we’re going to see this maintain through the summer, the median price, continuing to go up and over bids occurring on these properties. Curtis Chism, Realtor858-281-2568 | Mobilemailto:info@sandiegohomes.ioChism Team | DRE #02105113brokered by eXp Realty | DRE #01878277
Read MoreIs the San Diego Housing Market Finally Cooling off?
With the war in Ukraine and rising interest rates, is the market in San Diego finally cooling off? Let’s answer the question: what is happening in the San Diego real estate market? Is it finally cooling off because of things like the war in Ukraine, rising interest rates, inflation. How is that impacting the San Diego real estate market? The first thing to keep in mind is to remember that fear sells! There is so much doom and gloom going on right now in the media and real estate, but that’s because it’s all about clicks and getting eyeballs to sell advertising. Keep that in mind when you’re seeing these headlines, not everything you read is necessarily true. And especially when it comes to how it impacts the San Diego real estate market. San Diego real estate market is certainly not cooling off right now. Here’s what’s actually happening. The median price of homes is now at $975,000. For reference sake, from July through December of 2021, we hovered from $850,000 – $860,000 as the median price.In January, it shot up to $885,000. Then in February it went to $915,000. And now we’re at $975,000 in just three months. We’ve gained from $850,000 to $975,000. That’s $125,000 of equity gain that’s occurred on average in the county in just three months and housing prices are up 14.7%! It’s absolutely incredible! The sales to list price, which is a big metric we look out to see how far homes are selling over the original list price, is that 106.6%. Last month, it was 105.3%, which was a record breaking number. We’ve never had that high of an average final sales price to list price. And then this month we broke that record and that’s on a higher purchase price. This is showing how much people are overbidding on homes right now to take them down. On hot homes, they’re going for far more than 6.6% over list price. They’re going for 20%, 25%, 30% over list price. I just had a listing that closed in March and it sold for 25% over list price, a $190,000 over the original list price. The other thing we look at is days on market. That is trending back down but for a while itwas trending up. We had risen24 days on market then it went down to 23. As of March, we’re only at 19 days. Again, this is all the homes in the county so any hot home is selling over the weekend. It’s getting listed on, say a Tuesday, Wednesday, or Thursday, and then it’s sold by Monday or Tuesday the following week, once all the bids come in. It’s only those homes that aren’t maybe so great that are still on the market and drives that number back to the 19. But overall on average, we’re coming down to this 19 days on market. So if you’re looking for a home right now, you still need to be aggressive and go after. If you see it, you got to jump on it. You have to be willing to play the game. You have to be willing to go over the list price. That’s where we come in and we take a look at each specific home and find out what’s really happening. I came across a home this past week. It actually had fallen out of contract for certain reasons. It was still a great home and there was an opportunity to get under contract for really just essentially at this price because of what had happened with everything. There are opportunities out there. You just have to be looking for them and be working with an agent that can identify those and help you jump on them. But generally speaking, unfortunately, you’re going to have to prepare for spending 10%, 15%, 20% oftentimes over list price and look at things like covering appraisal gaps. That’s a lot of detailed information. We can go over in person, but that’s what’s actually happening in the economy. With rising inflation, people are pouring their money into real estate. It is the safest place to be in an inflationary environment. Long-term debt actually becomes cheap money in an inflationary environment. A lot of people recognize that, and that’s why so much money is coming into real estate right now. And especially San Diego! San Diego has just 9,500 homes, new units that are being built this year, just 9,500. When we compare that to other cities around the country that are of similar size to San Diego, like Seattle or Orlando, they’re building at least double that amount of homes. We’re very constricted in our space here. As you know, there’s really not a whole lot of room to grow and build in San Diego. And so that’s really constricted supply, especially with the various building regulations we have here. And just lack of permits being issued there just as very little supply. Overall demand is strong. Is it off the chart strong? Not necessarily, but because supply is so low and new building is so low, it’s driving the prices up very, very high. We did hit 2,000 homes total available finally, as far as inventory, we had been around 1700 homes for awhile. That was extremely, extremely low. 2,000 is still very low, but at least there’s a little bit more options out there for buyers right now. It’s going to be interesting to see what happens in the long-term as interest rates continue to rise and buyers do start to drop out of the market because they just cannot afford it anymore. There are going to be fewer buyers, there are going to be fewer offers. Eventually the over bids are going to start to level out a bit. But right now, as we’re seeing in the March data and the February data and the January data before that, that is not what’s happening right now. So we’ll see what happens come April and May. But right now it’s still extremely strong. If I can help you buy or sell a home, please reach out to me. I’d love to help you have a conversation about that and what that looks like for your specific situation. Curtis Chism, Realtor858-281-2568 | Mobilemailto:info@sandiegohomes.ioChism Team | DRE #02105113brokered by eXp Realty | DRE #01878277
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