04/28/2023
April/May 2023 San Diego Residential Real Estate Market Update...
It's been a couple months since my last market update, so here goes...
The San Diego Union Tribune's Phillip Molnar published two articles this week about the San Diego real estate market, one entitled: "San Diego 'annual' home price gains still down in new report, while Florida cities on the rise" and the other entitled: "San Diego home prices are rising again. Up 5% in a month".
I think you have to be a subscriber to read the second article, so if you aren't a subscriber OR if you don't have time to read the articles, I've summarized the main points and key takeaways in this email for you.
#1. San Diego home prices are rising again. The median home price rose 5.3% in March (compared to February) to $790,000. This is still down 1.3% from last March.
#2. Sellers are still hesitant to put their homes on the market. Analysts say there is little incentive to put homes on the market because most owners have locked in lower interest rates and they know it would be challenging to find another house to move into.
#3. Despite prices increasing, inventory is still dropping throughout San Diego County. This could continue to push up prices in the coming months. Due to low inventory, March saw the second lowest number of home sales in San Diego County since 1988.
#4. Higher mortgage interest rates had helped the market cool down last year. However, competition over limited supply and the realization rates aren’t decreasing are pushing buyers to make a move. Mortgage rates are right around 6.5% for a conventional 30-year fixed rate mortgage right now.
#5. In my February Market Update, I pointed out that Goldman Sachs published a report in January citing San Diego as one of four markets likely to see the biggest price declines in 2023. The report predicted that San Diego home prices would drop 13.4% over the next two years (by the end of 2024). The report reasoned that the areas that saw prices go up the most over the two pandemic years would see them go down the fastest.
Some local real estate analysts were critical of the Goldman Sachs report and the limited criteria used for its prediction.
So far, the Goldman Sachs prediction has not been ringing true, however there are still many economists predicting a recession is looming. I recommend that homebuyers have a solid long-term plan in case home values begin declining again.
Even if the Goldman Sachs prediction comes true, it wouldn't break any records in San Diego. The biggest annual drop in home values was around 26% in October 2008 (during the Great Recession).
CONCLUSION: I was hoping the "tamer" market that homebuyers experienced at the end of 2022 would continue through 2023. Right now that's not the case for most of my clients. I am commonly seeing the best homes get 3-10+ offers the first weekend a home comes on the market. This is highly dependent on the neighborhood, the type of home, and the price range, and some markets are less competitive than others.
Although many San Diego neighborhoods are experiencing strong seller's markets at the moment, it's true that we also have some neighborhoods with strong buyer's markets.
That said, it's much less daunting to be up against 3-10 offers than it is to be competing against 10-30+ offers (which was the norm for my clients in 2020/2021). As the market continues to shift, so do the strategies I use to help my clients find (and get) the perfect home.
I've helped five clients achieve their home-ownership goals in the last three months, and I'm happy to share more specifics on all of this if you're interested in more information.
As always, let me know if you have any questions. I look forward to hearing from you!
