Low Inventory and High Demand = Real Estate Frenzy

What a summer it has been here in San Diego! Buyer demand remains the bright spot in the housing market as low-interest rates and a slowly healing economy continue to drive this market up. Inventory remains the biggest obstacle as supply cannot keep up with demand. Combined with greater flexibility on where to live and the renewed importance of housing, Buyers are taking a hard look at what's important to them in a new home. As many local professionals continue to work from home, buyers have been able to be more flexible with their location of choice within San Diego but this also continues to be reflective with professionals from Los Angeles and San Francisco in particular. San Diego housing prices continue to be more reasonable than LA and SF comparatively; therefore, we are witnessing a migration of working professionals moving their businesses and families to San Diego.

The dearth of inventory is expected to begin to weigh more heavily on closed transactions as we enter the winter and lead to a greater erosion in housing affordability that will prevent many would-be homeowners from taking advantage of historically low-interest rates. Sellers on the other hand do not have much to fear from how the market is performing currently. In July, existing single-family homes were selling in a median of just 17 days. That is down 19% from the same point last year and unsold inventory is also down 34% from 2019. As a result, the median home is sold for full asking price in July 2020. Even though conventional wisdom would suggest not selling during a recession, there is far more demand than supply in California at the moment and the seller data certainly reflect this. Sellers continue to receive 3-10 offers on homes if competitively priced with many final sales prices getting pushed well above the actual list price.

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