This graph tells the story pretty well:
Breaking that into its component parts, sales are rising while inventory is declining:
Here’s the monthly look at the same:
Unsurprisingly, given the growing imbalance between buyers and sellers, prices moved upward:
In short, the sellers are in the driver’s seat for now. More charts below.
The data is finally starting to show what I said several months ago. Last year was a Flash Crash the likes of which I have never seen happen in real estate. Prices dropped 15 to 20% in just a few months! But sellers responded by digging in and the market has been recovering those losses since. If I had to put a guess out, Id say we have already recovered at least half of last years Flash Crash declines. This market is enough to give you whiplash! I just dont see listing counts growing much this year. Maybe next year people sellers will return to the markets with pricing back near highs? But if I had to guess I still think we will have a low volume market for years to come.
I look at data from other markets and San Diego seems to be the most inventory deprieved market in the country. Prices and rates have limited demand so at least the market is functioning OK. Much of the country is seeing inventory rise much more than here but I think they are gonna mimic us next year.
I still firmly believe that once people start getting hit where it hurts by rising interest rates and a harder credit environment, people will be forced to sell. The data clearly shows that more people bought at the very edge of what they can afford during the pandemic. Once unemployment bounces (which it almost for sure will, since every indicator is pointing that way) people will need to sell. At the same time, interest rates are going to be really high and buyers will be dealing with the same rising unemployment/uncertainty in the economy. Don’t see how this doesn’t lead to a large drop in prices.
I want thank Rich for all his unbiased efforts putting this site together for those who want to know about SD residential real estate data over the last 18 years. It was especially helpful during the GFC of 2008-11! I found my way to this site following bubbleinfo dot com in 2005. My wife and I have adult children and want them to be able to be homeowners here some year in the area where they grew up. I just read this in-depth article that’s a deep dive of so many factors involved. https://awealthofcommonsense.com/2023/04/will-we-ever-see-affordable-housing-prices/
Thanks jcheese, glad you found this site helpful. I will check out that article… Ben Carlson is a sensible guy.
That’s wishful thinking for a few reasons. First the volume of sales was not that high post pandemic especially at the highest prices last Spring. Second the percentage of all or mostly cash buyers were astonishingly high. Third of those that financed the percentage that will get to a distress level will be a relatively small fraction. Last if you think the mortgage is high for them, we’ll wait until they look at the rent for what they get. They will do what ever they can to stay and the government/lenders will be there to help again however they can.
Even during the bubble burst with a high level of toxic liar loans the listing counts never got excessive.
I think you are projecting what you would like to see. The data I look at every week along with a few decades experience tells me it’s not gonna happen. A 10% decline seasonally? Sure I could see that. A crash of 20-30%? Nope
I mean goldman sachs is also predicting a 20% drop in home prices, and I think they have plenty of experience in this sort of stuff, and likely just as high or higher quality data. I could very easily call you out as a wishful thinker as well since your a realtor and you make more money with less work when homes are higher priced…
To your last point, rents are dropping faster in san diego than almost anywhere else in the country right now. Marketplace did a segment on how 25% of the drop in shelter cpi this month was accounted for by san diego alone.
I have no objection to Goldman Sachs prediction for a National average. Good luck buying a National average home here or anywhere. We buy and sell San Diego homes around here and all real estate is local. SD is one of the most if not the most inventory deprived market in the country. Here you go, chew on this
You can enjoy a market like Nashville which has seen inventory skyrocket. They have a fraction of our population but more than 3X our inventory. That doesn’t help you here.
As for realtors, higher prices don’t increase our income nearly as much as higher volume. Volume is low and getting lower. Fortunately my income comes from multiple additional sources. I wish prices were more affordable and homes greater in supply for people here. Unfortunately that’s not the case and I don’t see relief coming
Do you have any thought on 92009 zip code in particular? I’m looking to purchase my first home by august and would love to work with a realtor with a strong understanding of the pricing trends.
That’s my home market and the one I follow closest. I’ve lived here about 25 years. The historical trend is on the favorable side of your plans. When the pandemic hit all past trends went out the window. But since last Summer we seem to be returning more to the old patterns. It’s something I am watching very closely. Feel free to pm