If you’ve been thinking about selling your San Diego home and have been waiting for the right moment to make your move, the time is now. Experts predict we’ll see the peak of this seller’s market during the summer of 2022.
Due to a unique mix of market conditions, consumer attitudes, and continued post-pandemic recovery, San Diegans who list their homes this summer will capitalize on both strong buyer demand and low competition from other sellers. Come late summer and fall, the market will gradually cool as interest rates continue to put pressure on prospective home buyers.
While the market is changing, it’s all great news for San Diego home sellers. To help you understand where the market is going so you can sell with confidence, I’ve compiled my experience, research, and real-time local market data into an exclusive San Diego housing market forecast for summer 2022.
SAN DIEGO HOME PRICES ARE NEARING THEIR PEAK
The median price for a single family home in San Diego County is now a record-breaking $875,000. That’s an increase of 18% from last year at this time! While San Diego continues to remain one of the most expensive metros in the country, our annual price gain actually mirrors that of the nation. According to a report from Corelogic, “U.S. home prices rose 18% year over year in the fourth quarter of 2021, up from the 8% annual gain recorded in the fourth quarter of 2020.”
On paper, San Diego continues to shatter record after record as new home sales propel our market to new heights each month. Yet, as I review the inventory of homes for sale each day, I’m starting to see more properties with price reductions. This happens when sellers don’t receive the offers and activity they expect. While these price reductions aren’t widespread, it does indicate that we may be reaching the ceiling on what buyers will pay in today’s market. Realtor.com recently shared an article where they identified ten US cities where prices have fallen the most, including our northern neighbor, Los Angeles.
Listing your home this summer means you’ll get the best possible price for it before the cooldown truly begins.
INTEREST RATES WILL IMPACT AFFORDABILITY
When the Federal Reserve announced they were raising benchmark rates a quarter percentage point in March, the writing was on the wall. The days of historically low interest rates were at an end. Today, buyers can expect to lock in a rate closer to 5.25%, depending on their qualifications. Back in January, they might have walked away with a rate around 3.22%.
Interest rate increases have a negative effect on affordability, lowering the threshold of what a given buyer can afford. In a city like San Diego where many buyers offer over asking to win the house, decreased affordability may mean looking to other neighborhoods for their dream home or rethinking their search completely. When buyers are priced out of the market, it reduces competition. Competition is good if you’re a home seller. Competition means multiple offers and multiple offers drive higher prices. As interest rates continue to climb, we’ll see the rate of price growth cool in response to buyers adjusting their plans.
SAN DIEGO HOMEOWNERS HAVE MORE EQUITY THAN THEY REALIZE San Diego
Record home prices also mean record equity! According to Corelogic, homeowners in California saw an average year-over-year equity gain of $117,000. Outside of Hawaii, this is the highest average gain of any state in the country.
Planning to sell your current property because you want to purchase another home in San Diego? Use your equity to stand out from other offers by putting more money down. Another option is to use your equity to cover the difference if the home doesn’t appraise, or to take care of other costs to close the deal. Selling your home this summer ensures you’ll net the maximum amount of equity from your home sale which gives you flexibility for your next purchase. You might even consider investing in residential or commercial properties to earn additional income.
FEARS OF A HOUSING BUBBLE ARE UNFOUNDED
When I speak with prospective home sellers, I often hear them voice fears that the housing market is headed for another crash. 2008 isn’t a distant memory for most people, so it’s understandable to be concerned that history is repeating itself. However, today’s market is in a very different place from the conditions that lead to the last market downturn.
First, the last crash was proceeded by lax lending practices that allowed many people to qualify for a home that was well outside their means. Buyers today are subject to more stringent review, especially if they’re trying to obtain a jumbo loan. Second, homeowners are more cautious. Rather than tapping the equity in their homes to finance other things, most people have taken a more reserved approach with their finances. Black Knight found that Americans hold a record $9.9 trillion in tappable equity, which is more than double what homeowners held in 2006. In particular, they found that 2021 “marks by far the largest single year gain on record.”
Real estate markets aren’t always easy to predict, but the data shows a strength and stability that should allay fears of a looming crash.
BOTTOMLINE
If selling your San Diego home is something you plan to do in the next few years, now is the time to act. You’ll cash out at the top of the market, put more cash in your pocket, and then benefit from a cooling market when you purchase your next home.
Wondering what your property might sell for? Looking for an expert to guide you? I would love to work with you this summer. Thanks to my connections with developers and investors around the county, I often find off-market deals for my clients. Several of my recent buyers have found their dream homes solely through the strength of my network. Let me put my experience to work for you to get your San Diego home sold and help you find your next property!
