Buckle up, because we’re at a pivotal point where the market’s path ahead could go one of two ways.. Let’s get into it!
Current Statistics
First, let’s establish where we stand today. As we entered the month, our inventory levels were razor-thin, hovering around a month and a half of available homes—a trend that has persisted for the past few years. Over the last 30 days, we witnessed a modest influx of new listings, with just over 1,500 homes hitting the market. Yet, this falls short of the ideal mark, as we aim for figures closer to the 3,000 homes per month. On the flip side, over 1,800 homes successfully closed escrow, with an additional 1,600 entering pending status. The takeaway? We’re selling faster than we’re listing, a formula that creates continued scarcity in the housing market.
So why do I believe we’re standing at a crossroads, where the market could either soar or stabilize? First and foremost, let’s examine our inventory versus sales. Historically, we’ve observed fluctuations in inventory levels corresponding to sales activity. January brought a much-needed spike in inventory, followed by a decline in February, coinciding with increased buyer activity. This pattern is worrisome, as sales are outpacing new listings—an equation that propels prices upward.
Interest Rates
Secondly, let’s talk about interest rates. While still relatively high by recent standards, hovering in the high 6’s to 7% range, interest rates have stabilized. This stability, coupled with consumer confidence and the Federal Reserve’s commitment to eventually lower rates, bodes well for continued buyer interest.
New Construction
Lastly, new development—or the lack thereof—casts a long shadow over our market. A mere 57 for sale new construction homes in San Diego County underscore a fundamental imbalance between housing supply and demand. Comparisons to past decades reveal a stark reality: we’re not building enough to keep pace with our growing population. This scarcity only serves to further constrict inventory levels, perpetuating the cycle of rising prices.
Bottom Line
In summary, the data paints a clear picture: unless we see a significant uptick in inventory, prices are poised to climb. While modest appreciation is healthy, unchecked growth reminiscent of recent years is cause for concern. We must strive for a balanced market where prices appreciate at a sustainable rate of three to five percent, fostering stability and affordability.
As always, my team and I are here to address any questions or concerns you may have. We are here to navigate this ever changing market with you!