Welcome to San Diego Blog | March 18, 2022
Coming Up… Spring
Many mistakes the Summer Market as the busiest time of the year for housing, yet it is the Spring Market that is home to the most real estate activity year in and year out.
The Spring Market
More homes come on the market during the spring than any other time of the year and demand reaches a peak.
Spring is just around the corner. The days are growing longer, temperatures are slowly rising, trees that had lost their leaves are blanketed with new buds about to burst to life. Spring officially begins on Saturday, March 20th, and it is also the start of housing’s Spring Market, the busiest time of the year for housing.
More homes are placed into escrow during the Spring Market than any other time of year. That is when the FOR-SALE sign is adorned with a smaller “SOLD” sign, letting the world know the home is no longer available to purchase. Many mistaken the Summer Market as the busiest season for real estate, but it is simply not true. Most families prefer to move when the kids are either out of, or about to get out of, school, between May and July. To accommodate that goal, they need to close escrow during those months. That means that they must come on the market during the spring, pound in that FOR-SALE sign, and open their home to potential buyers from March through June. The intention, of course, is to place their home into escrow as quickly as possible. It typically takes between 30 to 45 days to close escrow. A home is placed into pending status, the SOLD sign is installed, and an escrow is opened when a buyer and seller agree upon the price and terms of a contract. An escrow is when the home inspection takes place, an appraiser comes out and appraises the property, home disclosures and a truckload of other documents go back and forth for signatures, the loan is put together, and money exchanges hands. All this occurs prior to closing when the buyer is finally able to move into the home.
The demanding escrow process takes time to complete. A home must come on the market, be exposed to buyers, open escrow, and close to complete the goal of selling and moving. This can take anywhere from a couple to several months. If families want to move while the kids are out of school, that means coming on during the spring. For San Diego County, on average, more homes come on the market in May, the middle of spring, than any other month of the year. The number of homeowners coming on the market is heightened from March through August. That would enable families to move from May through August, prior to the kids going back to school. Real estate seasons center around the family and what is best for their children.
Demand, a snapshot of the prior 30-days of pending sales activity, gains momentum during the winter months, continues to rise and peak during the spring, downshifts a bit during the summer, slows further once the kids go back to school in the fall, and then plunges during the holidays. This is the normal, seasonal housing cycle, and 2022 will be no different. Demand has already been ramping up so far this year, rising from 1,744 pending sales on January 6th to 2,599 today, adding 855 in the past eight weeks, up 49%. In the past two weeks, it has risen by 2%, adding 58 pending sales. And it will continue to rise from here until it peaks between April and May. From there, demand will slowly fall.
Demand is a bit muted compared to the 3-year average prior to COVID (2017 to 2019), 3,045 pending sales, an extra 17% or 446 more. This is entirely due to a combination of an extremely anemic inventory, currently at record low levels, and fewer homes coming on the market so far this year. In fact, there have been 2,067 missing FOR-SALE signs during the first couple of months of 2022, 25% fewer than the 3-year average. With fewer available homes to purchase, demand has been muted. Nonetheless, demand readings have exceeded the inventory level since January of last year, indicative of an insanely Hot Seller’s Market. Prior to last year, the inventory has always been considerably higher than demand.
The issue this spring is that there will be a tremendous number of buyers competing against each other and clamoring to purchase every home that hits the market. While demand levels may be less than prior years, the real story is that the scarcity of homes available will result in just about every home that enters the fray obtaining a massive number of showings, multiple offers, sellers calling all the shots, and sales prices typically above their asking prices.
Coming up… SPRING. San Diego County’s housing is about to ramp up considerably for the next several months.
Copyright 2022 – Steven Thomas, Reports On Housing – All Rights Reserved. This report may not be reproduced in whole or part without express written permission by the author.