Is the San Diego housing market starting to finally cool down? Well, the simple, quick answer is yes. Well just a little bit at least. I know sitting here and reading off real estate market statistics can turn into the ultimate snooze fest very quickly so I’ll make this quick and straightforward.
Quick San Diego Market Recap – Past 12 Months
So anyone living in or moving to San Diego that has been active in the real estate market will already know this but for the last 12 months, even longer actually, it’s been brutal to be a San Diego home buyer. Each month we would see more listings go into contract than new home listings hitting the market for sale. The end result was a low inventory of homes or selection of homes for home buyers to choose from.
Add to that, mortgage interest rates that have remained at all-time historic lows. We had more and more home buyers trying to enter the market to take advantage of these historically low rates which led to an explosion of home buyer demand. The result was crazy bidding wars that just about everyone has heard about at this point.
If you were in it, you know what I mean. For example, I work with a ton of home buyers and I’ve never seen anything like it. It wasn’t uncommon for a good house to hit the market and get 20, maybe 25, even 30 offers in some cases… All happening in just a couple days. Super frustrating times to be a home buyer.
The Market is Shifting:
For the first time in a very long time, the statistical data for the month flipped: The number of homes hitting the market started to increase while the number of homes going into contract decreased. I’m not talking giant swings or changes but for even tiny changes, we have not seen this happen in a very long time. I’m talking years basically.
As a result, the time on market for a home to sell increased by a couple days and the actual total number of homes for sale crept up just a little bit. This makes sense because like I said before, we had less homes going into contract.
Changing San Diego Real Estate Market
Is this the first sign of a changing real estate market? So tough to say. Here are a few ideas I have:
Is this a Normal Seasonal Shift?
Could this be the annual cyclical spring / summer season winding down a bit early? We do have seasonal swings and a real estate market slow down in mid to late August is not super unusual but July is a little early. In fact, with so many buyers getting outbid, I would expect the spring / summer season to be extended, not cut short. I do not think this is what is happening.
Home Buyers are on Break
Another theory I’ve heard and I think it could have some merit is we are seeing the result of San Diego opening back up in mid-June (June 15th to be exact) and people just want to take a break, get outdoors, socialize, take vacations, all that good stuff. The thinking here is buying a home might be on the back burner for some folks at the moment. That’s possible I suppose.
The are less San Diego Home Buyers
You can’t ignore the statistics. Could this be the start of something much bigger, a major shift? I do think it’s entirely possible. Mortgage applications are down slightly for the month. Maybe the massive influx of home buyers we are used to is finally starting to thin out. Maybe just a tiny bit. I think some San Diego home buyers have given up the home search all together, other home buyers toughed it out, put in several offers, and finally got into and closed on their home. Either way, the result is less home buyers and less demand.
My opinion on the San Diego Real Estate Market
I don’t think this equals a market crash or a massive shift to a balanced market or even a sellers’ market nyet. If anything, I think we might be seeing the first signs of a shift back to something closer to what San Diego has experienced for the last decade or so.
San Diego has been basically a sellers’ market for as long as I can remember. At least as long as I have been a realtor. Losing a few home buyers in San Diego and adding some more San Diego homes for sale is exactly what we need right now. If this is the case, it’s good news for all. This current market is not good for anyone.
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