Welcome to San Diego Blog | October 9, 2019

San Diego County Housing Report | Payment Not Price

When it comes to housing, everybody puts way too much emphasis on the price of a home when they should really be taking a closer look at the monthly payment.

Focus on the Payment: Just a year ago, mortgage rates were at 4.75% and rising, substantially higher than today’s 3.5% rate.

Everyone has done it. When it is time to look for a brand-new car, narrowing down the car of choice is the first step. After determining the perfect car, the next step is to sit down and negotiate. Once the initial paperwork and credit application are complete, the salesperson leaves the negotiating table and visits privately with the manager. Once they return, they go over the payment for the car. After going back and forth to lower the monthly obligation by $20, it is not uncommon to get up and start calling around other dealers to see if a better payment is out there. After all, it will be the same monthly amount that will come out of the checking account for five-years!

When buying a home, buyers tend to focus a bit too much on the price of a home and not enough the monthly obligation. After finding a home and closing, the price no longer matters. It is the monthly payment that is withdrawn from the checking account every single month for 30-years.  With a home, it happens 360 times versus 60 times for a car. As a society, why is so much time devoted to the monthly payment for a car, yet not for a home?

Detached homes are up 81% in San Diego County since bottoming out in 2009. Home values appreciated significantly from 2012 – 2017. In June of 2017, values surpassed the record peak prior to the Great Recession in June 2007. 

Many buyers are hoping that values are unaffordable and have reached a peak, however, that is simply not correct. Home values have not yet peaked.

Buyers are sitting on the sidelines….waiting….and waiting…. and waiting. They are trying to time the market. Economists and prognosticators will vouch for that timing the market is next to impossible. 

This is not a bubble compared with 2006/ 2007. That was a bubble. I said it was a bubble then, and it was. Prices now are relatively high, but there is not that frenzy that happens because the people who manage the capital have been through the global financial crisis, and once you’ve lived through that you are not anxious for a repeat – Stephen Schwarzman, head of Blackstone who manages $545 billion in assets,

As a result, many capable buyers have been permanently sitting on the sidelines rather than cashing in on an excellent opportunity…. historically low-interest rates.

November of 2018, the 30-year mortgage climbed all the way to 5%. Because of that, housing slowed to a crawl that everyone in the industry felt. But, since then, rates have plummeted to 3.5%. That is a 30% difference. For a $700k loan, that is $614 per month savings. 

We are now in the yearly housing cycle where inventory is dropping right now and will continue to drop through the end of the year and through the start of 2020, with indicators showing less inventory at the start of 2020 vs the start of 2019. With less inventory = higher demand, leading to a hotter start to the housing market than we have become accustomed to last year.

San Diego County Housing Market Summary:

  • The active listing inventory decreased by 57 homes in the past two weeks, down 1%, and now totals 6,957, its lowest level since April. Last year, there were 8,282 homes on the market, 1,325 more than today.
  • Demand, the number of new pending sales over the prior month, decreased by 33 pending sales in the past two weeks, down 1%, and now totals 2,956. Last year, there were 2,652 pending sales, 10% fewer than today.
  • For homes priced below $750,000, the market is a Seller’s Market (less than 60 days) with an Expected Market Time of 54 days. This range represents 55% of the active inventory and 72% of demand.
  • For homes priced between $750,000 and $1 million, the Expected Market Time is 75 days, a slight Seller’s Market (between 60 to 90 days). This range represents 15% of the active inventory and 14% of demand.
  • For homes priced between $1 million and $1.25 million, the Expected Market Time is 95 days, a Balanced Market. This range represents 6% of the active inventory and 4% of demand.
  • For luxury homes priced between $1.25 million and $1.5 million, the Expected Market Time in the past two-weeks decreased from 133 to 112 days. For homes priced between $1.5 million and $2 million, the Expected Market Time decreased from 163 to 139 days. For luxury homes priced between $2 million and $4 million, the Expected Market Time decreased from 227 to 217 days. For luxury homes priced above $4 million, the Expected Market Time increased from 736 to 1,149 days.
  • The luxury end, all homes above $1.25 million, accounts for 24% of the inventory and only 9.5% of demand.
  • Distressed homes, both short sales, and foreclosures combined, made up only 0.5% of all listings and 0.7% of demand. There are only 27 foreclosures and 10 short sales available to purchase today in all of San Diego County, 37 total distressed homes on the active market, down three from two weeks ago. Last year, there were 68 total distressed homes on the market, slightly more than today.
  • There were 3,406 closed residential resales in August, 1% more than August 2018’s 3,386 closed sales. August marked a 4% decline compared to July 2019. The sales to list price ratio was 97.7% for all of San Diego County. Foreclosures accounted for just 0.4% of all closed sales, and short sales accounted for 0.1%. That means that 99.5% of all sales were good ol’ fashioned sellers with equity.


To request to read/download the full report and charts, please visit my website, email me at Robert@WelcometoSanDiego.com or fill in the contact us box below.

I appreciate your time and value the opportunity to earn your business. It is my pleasure to assist you when you need it.

Robert Gmur | Robert@WelcomeToSanDiego.com | 949-310-5195 | www.RobertGmur.com


Written by: Robert Gmur

Categories: Market Conditions, Market Trends, San Diego Real Estate, Sellers, Tips for Buyers, Uncategorized

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