San Diego Real Estate Update – June 2024

Welcome to this month’s real estate update. Today, I’m diving into a significant trend that has emerged over the past two months – for the first time in a while, we’ve seen more inventory hitting the market than homes actually selling. So, the big question is: Is this a good thing or a bad thing for our market? Let’s break it down.

Current Market Overview

In the past 30 days, here’s what we’ve observed:

  • Homes Sold: 2,186
  • Price Adjustments: 1,512
  • Closed Escrows: 2,036
  • Pending Sales: 1,760

For the past 2 years we’ve seen more inventory than sales, but that trend is shifting. So, what does this mean for buyers and sellers?

The Market’s Direction

Many people might see increasing inventory and panic, predicting falling prices and decreased demand. However, that’s not necessarily the case. Here’s why:

  1. Demand Stability: Despite higher inventory, demand remains steady. In fact, over the past four months, we’ve seen a slow ramp-up in sales, which is typical for this time of year. Yes it’s less than in years past, however buyer demand is still strong. 
  2. Healthy Appreciation: Rapid price increases aren’t sustainable. Seeing more inventory helps cool the market to a healthier appreciation rate of around 5-7% annually, rather than the unsustainable 20% we’ve seen in recent years.

Interest Rates and Their Impact

Interest rates are currently at 7%, which is high and could deter some buyers due to increased mortgage payments. Yet, demand remains robust, indicating a strong underlying market. It’s important to note that:

  • 49.8% of homes are selling over asking price: This statistic reflects continued strong demand despite higher interest rates.

Market Segmentation

Different segments of the market are behaving uniquely:

  • High-End Market: Baby boomers seeking single-level homes and condos along the coastline are driving this segment.
  • Mid-Range Market: Tech professionals and high-net-worth younger buyers are actively purchasing homes in the $700,000 to $1.4 million range.
  • Family Homes: Larger homes that typically require substantial loans are seeing slower movement due to the high interest rates, impacting affordability.

Predictions and Advice

For the rest of the year, I predict that prices will either hold steady or increase slightly, especially in higher demand segments like coastal single-level homes and mid-range properties. However, larger family homes might see some price adjustments due to affordability issues.

Tips for Buyers and Sellers

It’s crucial to monitor interest rates closely, as the Federal Reserve’s decisions will have a significant impact on the market. If rates decrease towards the end of summer, we could experience a hot winter market. Conversely, if rates remain high, a slower winter is more likely. Additionally, staying informed about market trends is essential. Keep an eye on these trends and don’t hesitate to reach out to us with any questions or for personalized advice.

As always, my team and I at True Local are here to help. Feel free to comment or reach out with any questions. Let’s navigate this market together!

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