Has the San Diego Real Estate Market Officially Shifted? A Breakdown of Current Trends and Insights
If you’ve been keeping an eye on the real estate market lately, you’re probably wondering: has the market finally shifted? With fluctuating inventory levels, changing interest rates, and shifting buyer behavior, it can be hard to keep track of where things stand. So, let’s break down the numbers and take a closer look at the current state of the market.
The Current Market Overview
Over the past 30 days, we’ve seen just over 2,300 new homes come on the market. While this number is fairly consistent with what we’ve seen over the last six to eight months, there is a slight shift when we look at the other key numbers.
Around 2,000 homes have closed, meaning they’ve been completely removed from the market, while 1,700 homes have entered escrow. This represents a 500-home gap between new listings and homes going into escrow — a noticeable shift from the previous months. While these numbers aren’t dramatic, they do suggest that more inventory is coming onto the market than actual sales are happening, which indicates a slight imbalance between supply and demand.
What Type of Market Are We in Now?
To answer the burning question — What type of market are we in? — the short answer is: it’s no longer a seller’s market. In fact, we’ve shifted into what can be described as a balanced market. However, there are signs that we may be teetering toward a buyer’s market, especially as we look at certain trends.
1. Increased Inventory
This year, we’ve seen new listings increase by about 11% compared to last year. This surge in inventory means more homes are available to buyers, which helps move the market away from a seller-dominant market.
2. Decreased Sales Activity
Pending sales and closed sales have also decreased, though this is expected considering the economic uncertainty and political changes we’ve witnessed this year. Buyers are more hesitant, holding back to see what will happen in the market.
3. Price Adjustments
One of the most significant shifts is the decrease in the sale price compared to the asking price. Homes are now selling for 1.3% less than their original asking price, meaning more negotiations are taking place. This is a welcome development for buyers who have been on the losing side of price hikes in recent years, giving them more power at the negotiating table.
4. Longer Time on Market
Homes are also taking longer to sell. The number of days on market has increased by 17%, further indicating that the demand is not as high as it was in previous months. With more homes available and relatively steady buyer demand, homes are sitting on the market for a longer period.
5. Declining Affordability
Affordability is starting to improve, thanks to a couple of factors. First, the slight decrease in home prices gives buyers a bit more breathing room. Second, interest rates have been dropping. Although the Federal Reserve didn’t make a significant move to lower interest rates, they’ve started to buy bonds again, leading to a quarter-percent drop in rates. Projections suggest rates could continue to fall, potentially landing around 6.5% in the near future. This is promising news for both buyers and sellers, as lower rates could help stimulate more activity in the market.
What Does This Mean Moving Forward?
Given these trends, it’s likely that we’ll see a short-term opportunity for buyers to negotiate better deals. History shows that when there’s more inventory than demand, buyers typically have the upper hand for a brief period. However, don’t expect significant price drops — the Federal Reserve controls the levers that could prevent a major market correction. If the Fed reduces rates further, it will likely spur more buyers into the market and encourage homeowners to sell, further stabilizing prices.
Projections for the coming months suggest we’ll see modest price appreciation, with analysts predicting a 2-4% increase in home values. In San Diego, where demand remains strong, prices are expected to rise around 2-5%, which is optimistic given the current market climate.
Advice for Buyers and Sellers
For buyers, this could be a great time to enter the market. Savvy investors are already moving some of their funds into real estate, seeing it as a safer, long-term investment. If you’re considering purchasing a home, following this trend might be wise, especially as interest rates continue to drop.
For sellers, it’s all about preparation and pricing. Homes that are overpriced or poorly presented aren’t selling right now, so it’s crucial to ensure your home stands out in the market. With fewer buyers actively looking, you’ll want to ensure that your home is priced right and presented in its best light. This is where working with a skilled real estate professional, like myself or someone from my team, can make all the difference.
Conclusion
While the market has shifted, we’re not seeing dramatic changes. Instead, we’re entering a more balanced period, where buyers have a bit more negotiating power, and inventory levels are starting to increase. As interest rates continue to stabilize and potentially decrease, we can expect more buyers to return to the market, which will help keep values steady.
Whether you’re looking to buy or sell, it’s important to stay informed and work with experienced professionals to navigate this evolving market. If you have any questions or want to discuss how these changes might affect you, don’t hesitate to reach out!