What’s Happening to the San Diego Real Estate Market?
If you’ve been listening to all the chatter, you’ve probably heard talk of a shift in the San Diego real estate market. Well, it isn’t just speculation from your crazy uncle, September saw a major change unlike anything we’ve seen in the past couple of years.
According to SDAR President Steve Fraioli, “Single-family home sales dropped 25 percent in September, compared to August, and were nearly 22 percent lower than the same month last year. Condominiums and townhomes similarly saw a 25 percent decrease last month, and are down about 23 percent from September of last year. So far in 2018, resale home sales are off by 9 percent compared to the same nine months of 2017.”
25% fewer sales! That’s a big drop in one month. However it’s important to understand that median prices are still strong. Overall prices for both single family homes and condos/townhomes are up about 7% from last year and condo prices were actually up about 2% in September from August. The median price for single family homes fell slightly from $665,000 to $650,000, August to September.
The slow-down is not too surprising. Since the beginning of the year interest rates on mortgages have increased by about .75% and we are likely to see additional increases over the next 12 – 24 months. When interest rates rise, buyers can afford less and the pool of qualified buyers is reduced.
So as we move into what is traditionally a slower time of the year over the holidays, what can we expect? My prediction is that we will see some price softening in what I call the “stretch zone” from $700,000 - $1,000,000…a price range that many buyers have stretched to reach over the past 2 years but that now might just be too much, especially with higher interest rates. The single family home market under $700,000 should remain strong and in desired areas I think we will continue to see some price increases over 2019. The same should be true for condos/townhomes under $400,000. We will likely also see a longer time on market for both single family homes and condos as buyers take a deep breath and realize that the buying frenzy of last spring is over and the market is simply less competitive.
So despite a slow down last month, the San Diego real estate market is still healthy and a good place to have your money. Please don’t hesitate to contact me with any of your questions. And as always, I thank you for your continued support and referrals.
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