October 2020 - San Diego Real Estate Market Update
A contentious presidential election, a pandemic with infection rates on the rise again, still no stimulus approved and a volatile stock market. And yet, the real estate market is as hot as it could be. Hot, but not unaffected.
The impact these factors have had on the housing industry have primarily impacted inventory - there are far fewer homes available for sale than there are ready and willing buyers. Homebuyers are out in droves, showing no sign of slowing down for the winter or beyond. They are armed with savings from their missed vacations, record-low interest rates being held down by the Fed and a willingness to pay over asking price on most properties. This buyer demand is causing home prices to soar - we're seeing record-breaking median home values rise month-over-month across the country. Home builder sentiment is also extremely high - the builders know, if they build it, the homebuyers will come. And yet, with all of that money to be made - inventory of homes for sale remains extremely low.
So that leaves us with two fundamental questions:
1. Why aren't homeowners listing their properties for sale when the market is at the highest point it's ever been?
2. Why aren't homebuilders building enough properties to absorb demand when builder confidence is skyrocketing?
The answer to the latter is fairly straightforward - because of the Coronavirus pandemic, lumber prices have skyrocketed due to international trade issues. Additionally, construction is an essential in-person business but it is difficult to maintain social distancing guidelines. The construction sector has posted the most job losses in San Diego County of any industry. Add that to the already cumbersome regulations and zoning restrictions across San Diego County and we can count new construction out as source of relief from chronically low inventory.
The answers to the question of why homeowners aren't selling are numerous.
Homeowners are concerned that they will not be able to purchase a replacement property that works for them once they've sold their home due to the high prices of real estate across the country.
They're waiting until after the election. With the candidates representing such drastically different economic approaches and issues on the Ballot locally like Prop. 19 which would impact property taxes and inheritance decisions for many, it seems sellers would like to have a better gauge on the future political climate before they make a big move.
They don't want to allow showings in their homes knowing dozens or hundreds of strangers will pass through and those visitors may or may not follow safety protocols implemented by homeowners and realtors to keep everyone safe during the pandemic.
Simple lack of motivation. They are comfortable in their homes and see it as a better investment to stay put and perhaps remodel, add on, etc…
They've been able to refinance to take advantage of today's low rates and the equity they've built to keep their monthly housing expenses low.
Landlords are benefitting from ever-rising rents and are disincentivized to sell their rental properties.
For the few homeowners who were able to take advantage of mortgage forbearance options selling would require them to rent a replacement property, causing their housing expenses to go up.
If you are a homeowner and have considered selling, but have decided to hold off for the reasons above, I would love to hear from you to discuss your thoughts on the current market.
If you are a would-be homebuyer that is facing these current market factors, I would also love to hear your experiences and thoughts about the current market.
As always, we will be here to continue to provide you with updates about the housing market and answer any and all of your questions. Feel free to reach out to us anytime.
HOMEOWNER RESOURCES:
FUTURE HOME BUYER RESOURCES: