The first quarter of 2016 has turned out to be quite the roller coaster ride for San Diego Real Estate. Giving buyers less homes to choose from at higher prices. This has been due largely to the lack of inventory in most of the county.
Here is what the numbers look like:
The number of Closed Sales decreased 6.7% for Detached homes and 0.6% for Attached homes. But Pending Sales is up 3.1% for Detached and 9.9% for Attached homes.
The inventory (total number of homes for sale) decreased 15% for Detached homes and 25.8% for Attached homes. Our total Months of Inventory dropped 21.4% to 2.2 months of supply for Detached homes and decreased 36% to 1.6 month supply for Attached homes.
With so many buyers who want to take advantage of the still historically low mortgage rates and less homes on the market the Median Sales Price moved up 7.0% to $551,000 for Detached homes and 4.0% to $360,000 for Attached homes.
Another sign that we have more buyers than homes is the Days on Market; which decreased 14% for Detached homes and 26.2% for Attached homes.
With the Spring Selling Season coming on we are seeing activity increase dramatically. It doesn’t seem like it because as fast as homes are coming on the market they are going straight into pending. This is great news for home sellers. Maybe not so great for buyers who risk over paying because of multiple offers.
So are we getting ready for another Real Estate Bubble?
No. This increase in home prices is caused by Supply and Demand, not a case of very loose lending policies. Buyers know that it is inevitable that mortgage rates will start to increase and are rushing to get their home before they do.
Market Activity should increase in the 2nd quarter as it tends to be the best time to list your home for sale. It is important for buyers and sellers to look closely at more detailed data for both the type of property they are considering/selling as well as the neighborhood in order to get a true picture of their particular area of interest.
Going forward we expect prices to remain strong as the factors driving demand for real estate in San Diego will likely remain unchanged. Sellers will continue to be firm on prices and buyers will need to be decisive to avoid disappointment. Demand is present but there is not an abundance of choice . . . yet.