On the second day of the second decade of the 21st Century, a recent Zillow survey revealed results that led to predictions that the San Diego real estate market – with a population that exceeds 1.3 million – would likely be California’s hottest home sales market for the upcoming year.
At the start of the decade, the San Diego real estate market, the 2nd largest in the state, was firing on all cylinders, with growth supported by historically low mortgage rates, impressive unemployment rates and a stock market showing little signs of slowing down.
San Diego has some of the best year-round weather, and is one of the most walkable/desirable cities in the country. Together, the benefits that San Diego offers have caused tremendous demand, which has resulted in some buyers being outpriced in the market.
Enter COVID-19, the newest of the dangerous coronaviruses.
To stop the race-fast spread of COVID-19, California was one of several states that took the lead in action against this developing pandemic and issued strict stay-at-home orders. Real estate professionals collectively held breath and waited to see the damage inflicted by a partially closed economy on the housing market in southern California.
While the actual number of home sales has dropped from May 2020 compared to May 2019, the prices of homes in the San Diego real estate market were relatively unchanged. In fact, in mid-June 2020, the San Diego Union-Tribune reported that the median home prices for home sales were up about 3.5% from last year’s home prices.
The decline in San Diego’s real estate inventory was caused by an expected knee-jerk reaction of home sellers pulling their homes off the market to be cautious. The result has created bidding wars in certain factions of the San Diego real estate market because the availability of homes for sale is now so limited.
For example, according to Redfin, in May 2020, there were about 5,200 homes for sale in San Diego County, a decrease in the number of homes when compared to the number of home listings in May 2019 – 7,300 and May 2018 – 6,700.
The incredible and lasting appeal of areas like San Diego has withstood many market cycles and challenges. Perhaps this is no more evident that just reviewing an important technical real estate metric – the price-to-list ratio – the percentage of asking price a seller receives.
According to Realtor.com, the sale-to-list price ratio for May 2020 in San Diego was 99.42%, with a slight upward trend. Sellers are receiving almost full offer prices!
With rates at historic lows, carpe diem – seize the day!