Hey guys, in this month’s episode I’m going to answer the question on everyone’s mind: where are prices headed? Before we get into projections, it’s important to know where we currently stand.
Home Sales
Fair warning… these numbers don’t sound good but please read to the end. Pending sales are down by 37%, closed sales are down 36%, and days on market have increased by 52%. While these numbers are dramatic, these levels are actually pretty similar to what we had in the 2018. To put things in perspective, the average days on market is around 3 weeks, which is not bad at all! The only big difference we are currently experiencing is much higher interest rates.
What could make this market substantially different from 2018? The biggest factor here is inventory. If we see enough inventory come onto the market, we will start seeing less demand and homes sitting on the market for longer periods of time. However, nobody is able to predict what’s coming next because of the lack of new listings. In fact, new listings are down by 13% compared to this time last year.
How Will Prices Come Down?
Again, this is inventory-driven. Though demand is currently lower than it’s been in the past, there will undoubtedly always be demand here in San Diego so that core situation will not change. More inventory is what we would need in order to see prices start to come down. However, there currently isn’t any viable avenues of increasing inventory anytime soon. If we take a look at foreclosures, which would be something that helps increase inventory, these have decreased by 9% since last year! We’ve also never had enough new construction in San Diego, despite it being up around 6% for attached homes in the county.
So why have we seen prices come down a bit despite all these factors? The biggest reason is the high interest rates. While these rates go up, buyers will begin to put in slightly lower offers.
The bottom line is that we don’t know yet where prices are headed. While they’re clearly coming down from what they were 3-6 months ago, the lack of inventory and somewhat steady demand is making it difficult to predict what’s going to unfold. I’d recommend keeping your eye on inventory levels and interest rates for cues.
Buyer Advice
It is definitely a scary time in the market and it can be nerve-racking seeing all the headlines out there. However, if you’re worried about prices adjusting it would be helpful to do some research to figure out just how drastic these price adjustments might be. If it’s just 3%-5%, which most of the analysts are predicting, then if you could buy the home of your dreams for say… 5%-10% under market value, would you? We’ve been able to find that sweet spot for quite a few buyers out there!
Seller Advice
Homes aren’t flying off the market anymore so it’s important to be strategic when you decide to sell. To start, you want to be sure your home is competitively priced in order to maximize the buyer activity. If you want to sell for top dollar, you’ll also want to make sure you’re home is in excellent shape! Fresh carpet, a new paint job, and staging are all recommended to get your home market-ready. We can help with all of these upgrades and even cover the upfront costs with our Compass Concierge program. Lastly, during turbulent times like these, it is more important than ever to hire a great Realtor!
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
- Or give us a call at 888-503-3117
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