San Diego Real Estate Update – March 2023

Hey, guys! This month, I am here to answer the question on everyone’s mind: Where are San Diego real estate prices headed?

Last Month’s Statistics

Now, before I get into any predictions, let’s take a look at where we’re at today. I like to follow three key stats each month to gauge where the market is heading. First up is new inventory – in the last 30 days, we’ve only seen about 1,100 homes hit the market. Now, as a realtor, I’d love to see that number closer to 2,500 this time of year. The low inventory levels we’ve seen over the past two months are a sign that we’re just not getting enough homes on the market.

The second stat I look at is the number of homes sold. We all know that pricing is determined by supply and demand, and here’s where things get interesting. In the last month, 1,800 homes sold, but only 1,100 new homes hit the market. That’s a pretty big difference, folks.

Finally, I always check the number of homes that are pending – in other words, properties that have accepted an offer and are in escrow. And right now, we’re sitting at 1,700 homes under contract. This tells us that our supply and demand is a little out of whack.

Where are prices headed?

So, where do we think prices are heading? It all comes down to supply and demand. Unfortunately, we’re just not seeing enough supply right now. Why? Well, it turns out that over 50% of mortgages across the US have an interest rate below 3.5%. That means that anyone looking to move up or downsize would be paying almost double the interest rate they currently have. No wonder people are second-guessing making a move!

As a realtor, I’m always encouraging my clients to hold onto their real estate and turn it into an investment property. With rental rates going up, many homeowners are considering buying a new property and renting out their current one.

So, when will we see enough inventory to balance out the supply and demand factor? Unfortunately, I don’t have an answer for that. We don’t have a foreclosure market, and new development in San Diego is slow. So, these low inventory levels may stick around for a while.

Will interest rate come back down?

Now, the big unknown in all of this is interest rates. Over the past two years, we’ve seen interest rates go up and down quite a bit. The market slowed down drastically when rates were increased to 7% but since then they have floated up and down. My prediction is that they’ll level out around 6-6.5%, but honestly, there is no way to be sure. The Fed has already came out and said their next increase will likely be a quarter percent increase instead of a half of percent.

Buyers and Sellers – Looking forward

So, what does all this mean for buyers and sellers? The market usually tends to pick up around this time of year and if we continue to see more sales than new inventory, prices will continue to rise. And as we’ve already seen in 2023, that’s exactly what’s happening. As always, if you have any questions about the San Diego real estate market, don’t hesitate to reach out to me or anyone on the True Local team. Thanks for tuning in, folks!

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