San Diego has a reputation for being a difficult city to find a home in, and it still is. At the moment, the housing market in San Diego is the most expensive in the country.
Still, homes were moving very quickly. In San Diego, a home spent an average of 7 days on the market. However, we are currently returning to 30-day averages. Interest rates on mortgage loans have historically influenced consumer demand. Because borrowing rates have been so low recently, San Diegans have been able to cope with the high cost of homes. That situation is altering, though, as San Diego County’s mortgage interest rates start to rise.
Zillow forecasts 8% home value growth in the next year.
From my personal perspective, I don’t see this happening. I believe it will be 2-4% increase in prices and in some areas we will actually see a decrease of about 1-2%. This is because Zillow looks at an average national level and San Diego is anything but average. San Diego has many different neighborhoods and counties, each one can fluctuate differently than its neighbor.
We have definitely seen a shift in the market. What it looked like 6 months ago vs. 3 months ago vs. today is dramatic. The market change is so vast because we saw the crazy increase in the past two years and now we are seeing a decrease, but this decrease is more of a stabilization. The 8% increase that Zillow is quoting seems especially high for our market and just not what I see in the future for the San Diego real estate market.
I am not disagreeing with Zillow, but Zillow is a data platform that goes off of statistics and an algorithm, which being a local real estate expert gives me an edge because I am here in the city, living the fluctuations of the market firsthand and seeing how it has played out in the past and coming to a conclusion for the future.
Fewer multiple offers, a gradual increase in the amount of inventory available, and the number of days a property is on the market are all signs that an overheated market is beginning to cool off. Additionally, year-over-year appreciation rates have plateaued. When selling your home, you need to understand the market.
Just because the average market times are back to 30-45 days instead of 5-10 days doesn’t mean the prices are crashing. It is important for people to understand that we had an extreme increase and now we are slowly going down, but it is just more stable than a crash.
In Conclusion
Over the past two years, the high demand for San Diego homes has given rise to a heated market. The number of buyers increased, yet there were no listings available. There is just roughly 3.9 weeks’ worth of supply in the San Diego housing market. A balanced market would typically have a supply of about six months. The decline in new listings over the same period last year is mostly linked to homeowners’ reluctance to engage in the buyer’s market themselves. Due to the unusual combination of low supply and high demand, sellers have been able to raise their prices. As long as supply and demand are so lopsided, prices will probably keep slowly increasing or leveling out. If you are interested in learning how the market will affect your buying or selling experience, reach out today, and will help guide you through the process.
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