San Diego Market Update
december 2022
Brent provides quality insight on the San Diego housing market heading into 2023.
More of a reader? Catch the video transcript below!
Here’s what’s happening in the San Diego real estate market today.
Let’s start off with some quick data points.
Inventory is down. There are over 4,000 available homes for sale right now, which is something like a 19% drop from last month.
Available homes are up 9.5% compared to November of last year, but we’re still seeing inventory decline from its current highs.
On average, listings are staying on the market for about 29 days, which is up from about 17 days compared to last year.
The median home price in San Diego right now is $770,000, which is 11% off the spring peaks.
To summarize, we’re still up substantially from pre-pandemic levels, but we’re starting to see the market depreciate a little bit now.
Where does the market do from here?
It depends on a variety of things. We are very interest rate-sensitive right now. If rates continue to go up, it’s likely that housing prices will continue to pull back.
If we see rates going lower, then we’ll see buyer demand pick back up again.
It’s interesting because even though prices are even year over year, they’re down 11% from the April peaks and down a couple percent from last month.
Why is inventory trending downward?
Remember that resale, foreclosures, and new construction are our main three resources of supply in the market.
When it comes to resale, higher interest rates are playing a factor in the decrease in supply. Sellers are not getting the price that people were getting a few short months ago, so they’re thinking, “Well, if I can’t get that price, then I’m not going to sell another thing.”
In addition, a lot of people who have been in their homes for the last couple of years have taken advantage of really low interest rates. These homeowners are sitting there in their homes with 2% or 3% interest rates and they’re looking at an environment where interest rates are more than double that, so they are deciding to stay put.
Another factor is that there aren’t a ton of foreclosures right now, so there’s not a constant influx of foreclosed homes hitting the market.
Finally, because of high interest rates and properties depreciating in value, we’re not seeing a ton of new builds either.
What does this mean for the San Diego market?
This is actually a good thing for our market right now. With demand so low, and supply so low as well, it’s keeping a lid on just how fast home prices are depreciating.
If we saw a wave of foreclosures, or, for some reason, a wave of resales or new construction, the supply/demand imbalance could end up tipping.
While I’m not going to sit here and paint this rosy picture like San Diego isn’t experiencing depreciation off its spring high, I do want to say that there are a ton of buyers and sellers on the sidelines waiting for the other shoe to drop, so to speak.
I talk to potential buyers and sellers every day that are simply waiting to see what the Fed is going to continue to do with interest rates. They want to see that the volatility of the market calms down a bit before jumping in.
At some point, interest rates will start decreasing again, and we’ll see buyers re-enter the marketplace with enthusiasm and drive prices back up.
Right now, we’re kind of in this odd situation where not many people are selling or buying and everyone’s taking a wait-and-see approach while they wait out what the Federal Reserve is going to do.
Remember that this is just a season - and it will pass. Sometimes, it’s not so much about trying to predict the next thing that’s going to happen as much as it is trying to make a sound buying or selling decision for your unique situation.
My friends, I hope this was helpful for you today! Catch you in the next one!
Brent Edwards (aka Brent the Broker) is a residential real estate agent and Realtor in San Diego, CA who helps clients buy and sell homes in San Diego, California and all surrounding areas. Brent is a highly-recommended Realtor in San Diego by family, friends and past clients. Call Brent today at 619-550-8070 if you have any questions about real estate in San Diego or you'd like to buy or sell a home.
