It helps to assess where our San Diego market is today by looking at national real estate trends that have developed over the last three or four years, so that’s where we’ll start.
If you’ve been paying attention to trends over that period, you’ve noticed that property prices and incomes have continued to increase. On top of that, interest rates have stayed moderately low—the sub-4% range.
Late in 2018, we saw the Fed applying pressure to our markets to slightly drive rates up, which inevitably led to some changes. If prices and rates are both trending upward, something’s got to give. Housing inventory will increasingly swell and the market will slip into decline unless household incomes start to rise.
Though interest rate-related change has been felt on the national level, conditions have actually stayed relatively steady in our local San Diego market. Interest rates have improved through the first half of 2019, and that progress should continue for the remainder of the year.
The steadiness of our real estate environment is mostly attributable to our strong labor market. Constant job and wage growth in San Diego’s tech, biotech, and pharmaceutical industries, along with our military, has been majorly important to the health of our local market.
“The market is very mixed and beginning to balance out, and that’s widening opportunities for both buyers and sellers.”
In addition, the demand for housing has gone up as our population has grown larger and larger. San Diego’s population has continued to outpace our development of new construction.
Now, let’s take a look at the year-over-year numbers for our local market:
- Countywide home prices have increased by about 2.6%
- Inventory has increased by around 2.9%
- Home sales have decreased by about 7.3%
Above all, the one thing I want you to take away from today’s update is that the market is very mixed and beginning to balance out, and that’s widening opportunities for both buyers and sellers.
The lower price points, for example, are white hot right now: There’s a ton of demand, more and more millennials are entering this market, and inventory is scarce. The absorption rate in the entry-level tier is at about 2.4% currently, which means we have 2.4 months’ worth of inventory.
Given the balanced state our market is soon to be in, don’t hesitate to reach out to us with any questions you have, whether you’re buying or selling in San Diego. We look forward to hearing from you!