January 2021  Market Report for 4S Ranch and Del Sur

Last month I talked about the housing market going gangbusters in North San Diego. It continues to do so. Not even Christmas seems to be able to slow the market down. On December 23rd this home in South Carmel Valley received 28 offers, a record for the area. And in early December this home requested that buyers give the seller the power to cancel the sale even after the buyer paid for inspections and an appraisal.  At this time in history demand is swamping supply. Check out this graph showing demand in red more than twice that of supply in black in North County inland. ​

Often sellers are requesting a rent back from the buyer and in some cases sellers are only accepting offers contingent on the seller finding their next home.  This chart below really sums up the situation we find oursleves in. The number of available homes is anywhere from 1/3 to 1/7th of what it was last year and the year before at this time. That is a tight market. And it’s not just here, major metropolitan areas across the country are expereencing a similar run on housing. Last I looked, San Diego was the 3rd tightest area for housing just behind Phoenix and Seattle. ​

While there are few homes on the market, it’s likely to get better beginning in February. If you look at the chart February is when inventory starts to rise. 
The result is home prices rising and homes selling for more than asking price. Look at the purple line showing homes selling for more than 100% of asking price. Remember this is the average for all of North County Inland so homes that are well priced and desireable may well sell for 105% of asking price. The result is a 13 to 15% increase in home prices year over year for 2020. Worth noting that the price increase in 2019 was about 3%.  

There doesn’t appear to be anything on the horizon that would suggest price drops or major changes to the market especially as people from markets outside of San Diego decide to purchase here. Foreclosures aren’t likely as many loan foregiveness programs just pushed the buyer’s payments to the end of the loan cycle meaning homeowners won’t be delinquent.  Many buyers are financially qualified and lenders are screening them heavily unlike the crisis of 2008. 

A problem we are seeing once again are homeowners afraid to sell their houses for fear of not having a place to live. There is actually a way around this using a buy before you sell lending program but most sellers don’t know about it and find themselves in a pickle. 

Meanwhile Interest Rates continue to fall in all but one month over the past year. The 30 year fixed rates is down to 2.67% meaning not just lower payments but less money wasted on interest. Here’s an interesting fact, at an interest rate of 5.25% half of your first payment goes to interest and the other half to paying back the loan. But when your rate is 2.5% most of your first payment (70%) goes into paying off your loan with only 30% spent on interest.  

What to do if you’re a buyer?  Be ready - Have all of your finances in order, familiarize yourself with the contract and be ready to make an offer on a 24 hour notice. Be Reasonable - If the price is close to the comps and you like the place offer asking price at least and be ready to go higher, Be Flexible by offering non financial concessions like a rent back to the owner.  Remember that that hardest thing to find right now is a home that fits your preferences. The seller is likely in the same position. Offer some time to help them move.

If you are selling, you are in a market where you can get an excellent offer but you’re going to need to arrange your next place to live. Check out the buy before you sell lending program which allows you to purchase your next home first and sell your current home after and at a premium because your sale won’t be contingent on finding another home. Also if you’re not going to sell for a while start putting the pieces into place early. Check out the future seller program for more. 

So there you have it. Your market update for north San Diego. Enjoy your hoildays, stay safe and sane and keep in touch.