June 2021 Market Report for North San Diego
This month’s message is that things aren’t AS crazy as they were in the winter but we are still in a complete and utter seller’s market. Check out supply levels this year (in red) at 165 verses the prior years at this time - in green and black. We had a slight increase in supply for but overall we’re super low.
However we saw a change last month when pending sales dropped for the first time since Christmas when supply was super low. (Check out the drop to 293 on the chart) It’s just one data point but something to watch.
Here is what is probably happening. Back in February buyers were crazy for houses but in March and April new houses came to market which satisfied some of the most motivated buyers. (Check out the increase in red for March and April).
Back in February and March people were buying houses they knew they didn’t really like and paying with cash and no inspection. Thankfully we are not there now. There is a much better chance that a buyer can now buy a house they like and finance the purchase although they are still likely to pay more than the asking price.
Offer prices are still way over asking price at 106.8% although this number only catches some of what’s going on. Since January we’ve seen nearly 10% increases per month. Many 5 bedroom homes have increased by 40% since October. If seller’s didn’t raise their asking price we might be seeing offers at 140% of asking price.
Offer prices are still way over asking price at 106.8% although this number only catches some of what’s going on. Since January we’ve seen nearly 10% increases per month. Many 5 bedroom homes have increased by 40% since October. If seller’s didn’t raise their asking price we might be seeing offers at 140% of asking price.
Going forward there are 5 big drivers that support an increase in prices:
There are also a few potential scenarios that could help buyers if they occur.
So if you’ve been holding out on buying, my advice is what it has always been. Don't look for a deal look for a fit. A place you can stay in for 7+ years. Over the past decades the rolling 7 year average has always been positive (even during the 2008 meltdown). So take the time to find a community, neighborhood and home that fits you. Give a buzz and I’ll get you started.
- Interest rates are still in the 3% ballpark allowing buyers to pay more
- Covid and politics have driven a flight from cities to suburbs
- Covid has fueled the desire to have more space for families
- There has been an increase in the formation of households by millennials who delayed pre-pandemic
- We have a general lack of housing: San Diego needs to have a basic supply of around 10,000 - 13,000 houses a year to accommodate a city our size but we are only building around 6,500. (And many are in dense areas, not suburbs)
There are also a few potential scenarios that could help buyers if they occur.
- Biden’s proposed increase on the capital gains tax rate may persuade selling of houses now in 2020 in hopes that the tax change won't happen until after 2021
- Foreclosure moratorium end June 30th which could spur some new sales
- Institutional Investor have been buying lots of houses to rent competing with residential buyers in some parts of the country. If returns slow down decide to sell in mass in certain areas. However North San Diego County is not in their target area.
So if you’ve been holding out on buying, my advice is what it has always been. Don't look for a deal look for a fit. A place you can stay in for 7+ years. Over the past decades the rolling 7 year average has always been positive (even during the 2008 meltdown). So take the time to find a community, neighborhood and home that fits you. Give a buzz and I’ll get you started.
Never-the less March buyers whose homes closed in April paid on average 106.1% of asking price. (That's a record!) Experience in the market shows that many desirable homes sold for 15% or more than asking price.
