How does the market compare to normal years?
It’s deceiving to compare the 2021 market to 2020 and get a clear picture of the real estate market because 2020 was such an erratic year. We need to go back to prior years and compare our current market for context.
New Listing Supply in San Diego
Compared to 2016 through 2019, the season is running two months behind. New listings peaked in July when they usually peak in May.
The total listing count is running about 10%-15 % below normal. From 2016-2019, there was an average of 52K new listings per year. In 2020, there were 47K new listings. In 2021, there is 33K new listings year to date, compared to 38K by this time of year in previous years.
Buyer Demand
Now take a look at buyer foot traffic. Buyer demand started off the charts but is taking a nosedive. Buyers dropped out of the market. They got tired of bidding wars, rising prices and couldn’t get offers accepted because there weren’t enough homes to go around. They refinanced, remodeled, decided to wait or renewed their lease.
What to expect
When supply and demand get in line with previous years, we should see more modest price appreciation. For San Diego, that norm is 5.9% per year during 2016-2019.
October is a sweet spot for buyers
Historically there is an uptick in listings in October as sellers try to get their home sold before the end of the year. You can see increased housing supply, lower buyer foot traffic, fewer bidding wars, and more price adjustments (which is normal for this time of year).
Mortgage delinquencies almost at pre-pandemic levels
Nationally, there are roughly 53M homes that have a mortgage. About 2.3M homes are past due by 30 or more days. That works out to 4.41% delinquency rate nationally. In Feb 2020 (before the pandemic), the average was 3.73%.
In CA, the delinquency rate is 3.0%, 8th lowest of all states. Last month there were 13 foreclosures/short sales listed for sale in San Diego County, up from 9 in July. We will continue to watch this source of inventory.
Bottom Line:
There’s opportunity in October with more inventory and falling buyer demand. When supply and demand align with previous years, we will see more modest appreciation of around 5.9% per year. If you have any questions about the real estate market or would like to discuss buying or selling a home, contact me!
