San Diego Real Estate Market Update – June 2021

The median sales price in San Diego is $743,000.  The median detached home is $865,000 and a condo/townhome is $540,000.  

Homes are selling at 103.6% of list prices.  In other words, if a home is listed for $717,000, it would likely sell for $743,000, which is $26,000 over list price.

Inventory

It takes 9 days on market to sell and it continues to be a seller’s market at 1.0 months of inventory.  A balanced buyer/seller market is 6 months of inventory.

The number of new listings are up 5.5%, pending listings are up 25.1% and sold listings are up 78.2%.  It doesn’t take too much math to see that homes are getting absorbed faster than they are coming to market resulting in continued low inventory in San Diego.

Foreclosures

There were 13 foreclosure listings in San Diego last months down 35% from prior year.

Common Questions and Comments About Today’s Market

1.  Is it still a good time to buy?

Let’s take the following example.  I was chatting with a client about a home that was on the market.  It was listed for $640,000.  The average annual appreciation is 5.9% in  San Diego. 

Option 1:  Buy and Hold

If you were the buyer and decided to buy and hold for 5 years, here’s what your appreciation would look like:

Year 1 – $640,000
Year 2 – $677,760 
Year 3 – $717,748
Year 4 – $760,095 
Year 5 – $804,941

That’s almost $165,000 gained in 5 years plus an estimated $66,000 in mortgage reduction.

Option 2:  Wait

On the flip side, if you were the buyer and decided to wait, at what year would you buy it?  In one year, two years?  What would the payments be at that time with higher interest rates?  If rent is $2300, that’s $138,000 in expense over 5 years.

2.  You must be loving the real estate market!

The real estate market has been hot.  If you’re a seller, you’ve been reaping the benefits.  However, there are many buyers out there that have entered and left the market empty handed.  Buyer fatigue from bidding wars and rising prices have caused many buyers to resign to renewing their lease for another year.

People who have an “extra” home to sell, such as a second home or rental property have benefitted the most in this market.  But refer to #4 below.

Buyers, there’s still hope!

If you are a buyer, there’s still hope!  Because buyers are bowing out of the market, there are fewer offers being made.  They are strong offers, but not as many.  Days on market is starting to increase and price reductions can be spotted as sellers become less aggressive on their listing price.

What you can do

Keep an eye out for homes that go pending and then come back on market.  The second time around, you will likely have less competition.  Sellers are also more agreeable about price and repairs since they have already been through the emotional roller coaster of falling out of escrow.  Work with a real estate agent that can help you find off market deals.  Be quick and open to these opportunities when they arise.  And as the market cools off, that’s the time to jump in.

3.  Who is buying homes at these crazy high prices?

This is another question I get asked a lot.  People are seeing homes in their neighborhood go well above asking price.  I saw one go $300K over asking price the other day.

People are continuing to move to San Diego, especially from the Bay area and our prices are pretty “affordable” compared to what they are used to paying.  First time homebuyers that have saved up money are in the market to buy.  They may be liquidating from their 401Ks. or receiving help from family to put up the cash for their first home purchase.  Buyers are looking for more suitable homes to bring their elderly parents or loved ones to live with them.  Investors are buying homes to bring them up to par, and then putting them back into the market.

4.  I want to sell my house but the tenant refuses to vacate

There is currently a moratorium on removing a tenant unless there is  an imminent health and safety risk.  Refer to San Diego Ordinance 10724 and speak with a real estate attorney to discuss your options.  Read more about the ordinance here.

Cash for Keys

Some landlords have offered cash for keys to entice their tenants to move but they are still not moving out. The rental market is also starving for inventory due to ongoing eviction moratoriums.  Be careful about serving notice to your tenant.  There are restrictions in the ordinance 10724 so check with your attorney first.

However, if you are working on a cash for keys agreement with the tenant, the going rate seems to be $4,000-$10,000.

Bottom Line

If you have questions about the real estate market or your situation, contact me, I’m here to help!