To say that this has been an unusual year for real estate would be quite an understatement. In February and March of this year, home sales had slowed to the lowest level in many years. As agents, we were very concerned for our clients who needed to sell their homes. Would our sellers have to reduce their prices in order to sell their home during the Covid-19 pandemic?
Then some unexpected trends kicked in. Many who wanted to sell decided to wait and this created a short supply of homes. However, there were still plenty of buyers looking to make a purchase.
At the root of the San Diego housing market’s strength is supply and demand. The active listing inventory is currently at the lowest level for October since 2012. In fact, last year in October, there were 6,957 homes on the market in San Diego, and today there are only 3,958 homes. This is a significant reduction. The average market time to sell a home at this time last year was 77 days; today it is 33 days. This very low inventory and fast market times are keeping prices high. There continues to be more buyers than homes available in many markets.
The pandemic is creating more housing demand. Many people have discovered that their current housing is not working for them. A couple, both working from home and sharing the same kitchen table, can work for a few weeks, but not for months on end. That extra bedroom is very much in demand. Families often feel trapped in their homes and want more indoor and outdoor space. We are also seeing people decide to move out of state for more affordable housing. Similarly, people from the bay area who can now work remotely are moving to San Diego where housing is relatively more affordable.
There is some good news for buyers. The affordability factor has greatly improved. The record low interest rates are fueling unprecedented demand. Rates have reached 9 record lows so far this year. With many mortgage rates below 3%, current demand is off the charts. Many first-time buyers can now qualify for a loan and many buyers can afford more expensive homes. Buyers who are waiting for demand and prices to decline may not be taking the wisest approach. The market is likely to remain heated and values will rise as the low interest rates continue. Interest rates are expected to remain low for some time.