Lately San Diego homebuyers have become more cautious and sellers more impatient. The dramatic and current demand for housing in 2020 and 2021 has declined for many reasons.
The increase in inflation has certainly affected the market. According to Trade Economics, inflation reached July 2022 at 9.1% and decreased slightly in August to 8.5%. Whether this decline continues depends on many uncertainties, from the Federal Reserve adjusting interest rates up or down, to fluctuations in the Gross National Product, oil prices, and supply chain conditions.
For people in the market to buy or sell a home, 24-hour news coverage can be difficult. Is it a good time to buy or sell? Are we at the top of the market or should we wait for the market to turn down? How do we deal with rising housing prices?
According to Redfin, in July home prices in San Diego were 10.7% compared to last year, with an average price of $875,000. On average, homes in San Diego sell after 15 days on the market compared to 10 days last year.
Despite 885 homes sold in July, down from 1,583 in the same month last year, the San Diego housing market remains competitive. Redfin reported that homes in San Diego receive five offers on average and sell in about 14 days. The average price per square foot in San Diego is $649, up 12.5% from last year.
Meanwhile, according to Freddie Mac, the current interest rate on a 30-year fixed-rate mortgage is 5.66%. The 15-year loan is 4.98%, and the 5-year loan is 4.51%. This is a notable increase from the lows of the past few years.
But the 30-year-old average remains very low. When Freddie Mac began tracking rates in 1971 the average was less than 9%, and in 1981 a record high of 18.63% was recorded.
Have we been distracted over the past decade watching our home values skyrocket, receiving multiple offers that may exceed the asking price when a home hits the market? As a Realtor I have had trouble calming down sellers when their homes don’t have many buyers in the door when the home is for sale.
That was our country a few months ago. Buyers and sellers are afraid of changes in the market, supplemented by news reports or rising and falling prices.
In San Diego, home prices may be down a bit, but this isn’t 2008, which saw housing prices plummet in parts of San Diego due to questionable lending practices. This is not the case with the current market.
For example, if a house of $ 1 million enters 2%, that is a decrease in price of $ 20,000, and Realtors can work with buyers and sellers to arrange changes to be beneficial for both. We must remember that we have a serious housing shortage in San Diego with no short-term solution. In a world of supply and demand, the demand for housing throughout our region is as high as the supply.
I encourage buyers and sellers to be calm and patient. Don’t panic if you list your home and the ads aren’t pouring in overnight. We’ve seen market swings due to inflation and interest rates in the past, and we’ve come out strong. We will do it again.
Tiffany Torgan is the founder A History of La Jolla.