San Diego Real Estate Update – August 2022
Hey guys! In this month’s episode, we’re going to break down all of the stats for the month of July and look at the 12 percent appreciation rate year over year and why it might be wiped off the table.
Median Sales Prices are Going Down
We are already seeing some of the headlines come out stating that the average sales price across the county is being reduced and I think we’re going to see more of that come out this month.
Don’t let this scare you! I’ve spent a significant amount of time analyzing this market trying to figure out what’s going to unfold and I’m going to break it all down for you guys here.
Inventory
First off, I’m going to cover is the amount of inventory that we’re seeing. The first quarter of this year the inventory levels were pretty average relative to recent years with about 8,900 homes coming on the market.
In the second quarter we saw 9,900 homes for sale, a thousand more than the previous quarter! Now, focusing on the month of July, where we saw 3,500 homes hit the market in San Diego County, we can kind of project what we’re going to see this quarter when it comes to inventory.
We should see somewhere around 10,000 properties coming on the market this quarter. This really isn’t a significant increase and it shows that these articles coming out about the market crashing are just scare tactics. Don’t be concerned if you think we’re about to get flooded with inventory as the data shows that’s not what is unfolding.
What has Happened?
It’s not that inventory levels have actually spiked, it’s that the buyer demand has diminished. Due to the higher interest rates, which were double compared to rates at this time last year, buyers backed off the market and sat on the sidelines.
Sure enough with this last fed increase we saw people put their money into the bond market which actually helped our interest rates, dropping rates all the way down to 4.5% from. 6.25%.
When that happened, it definitely sparked a little bit of a fire into buyers and that’s why the month of July is most likely going to have more sales than previous months.
My Predictions
I’m going to answer the question that everybody is probably wondering: What do we think is going to unfold going forward?
Values will not Increase
We already have hit a threshold when it comes to values so we shouldn’t see an increase in values anytime soo. Though there are still properties that are selling for over asking price, those are definitely the properties that show extremely well.
The homes that have been nicely remodeled and advertised the proper way, are still selling at peak prices. Homes that need some work are selling for a little bit less. People understand that they’re going to have to put money into these properties, so they’re making offers that are just a little bit less to balance that out.
This trend is going to continue so we might see a little bit of a value drop across San Diego County for the remainder of the year. However, I don’t think it’s gonna decrease the actual yearly valuation that we’ve seen so far.
High-Interest Rates Pulled Buyers Back
Another prediction I want to make is something that we’ve seen unfold this year that’s really testing our affordability threshold.
With interest rates getting up to 6.5% a lot of buyers pulled back. As soon as rates came down to that 4.5%-5%, buyer activity started to pick back up. The market kind of stays relatively hot or flattens out.
As long as interest rates stay around this 5 percent range, I think we’re going to stay in a more healthy market. If they do increase up into the 6.5%-7% percent range I think that’s when we actually might see some values come down.
Advice to Buyers and Sellers
First and foremost if you’re a seller you can not overprice your property right now. You’ve got to prepare the home, make sure it shows extremely well, market it correctly, and price it right. We can help you with each one of these steps!
All of my buyer clients out there – be patient. There’s some inventory on the market but if you don’t see a home that you’re in love with give it some time.
When you do see a property that you fall in love with you gotta jump on it fast as things are moving a little bit slower and the opportunity goes to the people that will move quickly. If you have any questions please reach out to us.
If you ever have any questions at all, please reach out to us!
- If you are thinking about buying or selling we would love to help!
- Visit us at TrueLocalRealty.com
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