Welcome to San Diego Blog | May 28, 2020
THE MARKET IS BACK!!
We are very happy to report that the San Diego real estate market is back!! The real estate market has thus far proven to be resilient and we are getting back on track. What information do we have that supports this?
We have to start with the leading indicators that show us the trends of what buyers and sellers are doing. That being said, no buyers means no homes sold. So what is the buyer behavior looking like with Covid-19? On March 10 we saw a dramatic fall in the number of showings across the state of California. As illustrated in the chart below, you can see that we bottomed out on March 28 with a 68.8% reduction of property showings across California as a whole.
The market continued to limp along with very few showings until April 18th, at which time we saw a slow, but steady increase in the number of buyers that felt comfortable getting back into the marketplace. Today, we sit 3.8% above the pre-pandemic peak for the number of showings and the largest indicator is that we are only 3.1% off the number of showings at the same time last year. This is indeed great news!!!
Because real estate takes so long to sell, we won’t see the actual sold homes show what is really happening for another 20-45 days so the next leading indicator we look at is the number of homes pending. In the last 2 weeks, we’ve seen the number of pending home sales, which represents demand, skyrocket 37% in San Diego County. The number of homes pending leaped from 1843 to 2259 which is significant – at about the same velocity which Covid-19 stalled the market, we are rebounding back up!
The good news for sellers, but not so great for buyers is that the active inventory only climbed 2% in the last 2 weeks. With the demand increasing at 37% and the active inventory only increasing at 2%, this creates a situation of limited supply which will help create a floor for property values. We are seeing more pressure on detached homes priced under $750,000 and in some markets we are seeing multiple offers and properties selling well over list price. This is the zone where it is difficult to be a buyer today.
On the flip side, we are seeing some softening on luxury condos with high HOA dues in locations that are not A locations. We are also seeing less activity in the luxury market for detached homes over $3m. I will say that there are always exceptions to the norm for special properties in great locations. If your home has exceptional views, interior design, or is located in a magnificent setting, then you may just be impervious to normal market conditions. Ironically, after 2 years on the market, we finally saw a home sell for over $11m in Point Loma during the worst of the Pandemic.
As always, we try to provide good information that helps guide our friends and clients to make prudent decisions with their estates. If you would like to discuss the current conditions in your market for homes similar to yours, please reach out and we are happy to get detailed on the specifics of what you could expect for buying or selling a home.
Stay classy and enjoy some safe outdoor activities!