September 2020 - San Diego Real Estate Market Update
In my last market update, I discussed headlines that speculated a housing market downturn sometime in 2021. If you've been following the headlines over the last week, you'd see speculation that San Diego home prices will continue to rise throughout the next year.
What do I take away from this contradiction? I'll tell you. No one actually knows where the market is headed. We face challenges from Covid, the broader economy and an upcoming election. There are so many factors to consider that the one thing I can tell you with confidence is that anyone who tells you they know what's going to happen in the housing market is lying.
With that said, I have great confidence in the San Diego housing market both in the short term and in the long term. Here are some things I'm currently considering to guide my own decision making as a homeowner, a San Diego business owner and a parent:
Here are some promising insights into the San Diego housing market:
Single Family Home prices in San Diego have risen 1.9% in the last 30 days, and 13% in the last 12 months according to the California Association of Realtors or CAR.
This is primarily due to extremely low housing inventory for sale and enormous buyer demand due to low mortgage interest rates, population growth and lifestyle changes due to the events of this year.
My personal experience and the experiences of other agents in our market back up the data that homes are selling incredibly quickly - on average 13 days or less. Not only are they selling quickly, they're selling for over asking price - as evidenced by the 1.9% month-over-month increase in median home prices.
Only 6.93% of home loans are in forbearance nationwide, according to the Mortgage Bankers Association or MBA - and this number is on the decline month-over-month. Most forbearance agreements that many homeowners have taken advantage of are set up to simply tack payments onto the end of the loan or amortize the deferred amount into the life of the payments. Because very few homeowners will be faced with an unmanageable balloon payment and considering the increase in home values and rock-bottom interest rates on refis, most San Diego homeowners are comfortable with their mortgage payments. Therefor, we should not see a notable uptick in foreclosure activity.
Low inventory seems to be a permanent fixture for the San Diego housing market. Low inventory has been the name of the game since about 2013 and with so few available build-sites and an always-increasing uptick in demand for San Diego housing, the likelihood of prices declining is fairly low. San Diegans live in the best climate on earth and a hub for many high paying employment sectors, which creates a fairly stable housing market.
Here are the factors that could shift trends downward to watch for:
Prolonged unemployment for industries other than service and tourism and collateral damage to the economy due to COVID-19
An increase in interest rates and fees or tightened mortgage guidelines which may push buyer demand lower
Changes in taxation, especially mortgage interest and property tax deductions which both received lower caps by the current administration
The upcoming election - the candidates have different approaches to housing and regardless of the outcome of the election we will see shifts in the real estate market as a result
Currently, the real estate market is moving at the speed of light. As soon as a home is listed, potential buyers are rushing for a showing appointment. We're receiving multiple offers within days of listing and are most often in escrow in under a week for over listing price. Buyers face a tough market, often making offers on multiple homes before winning out on one - but they are still enjoying extremely low interest rates, so mortgage application rates keep climbing.
San Diego does not tend to see much of a seasonal shift in housing activity due to our warm weather, and with the momentum of the current inventory and demand situation we are not expecting much of a slow down this Winter.
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: