Will San Diego home prices rise or fall now that businesses are starting to re-open?
This is the most common question I am getting right now. The short answer is No, it is not likely home prices will fall.
Homebuyers in San Diego have not been deterred by Stay-at-home orders, even as our inventory shrinks and home prices continue to rise.
Lets take a look:
First, this graph from Redfin data shows that homeowners who had previously listed their homes changed their minds and delisted their homes causing the number of homes for sale in San Diego County to fall almost 31% from April to May.
As you can see however, we are beginning to see more of these homes come back on the market.
But … this exacerbated an already chronically low inventory of homes available for purchase. At the start of May, there were five thousand two hundred and seventy (5,270) homes for sale in the ENTIRE county. That is down from seven thousand two hundred and sixty (7,260) from the same time last year and six thousand one hundred and forty four (6,144) from May of 2018.
This has not stopped home buyers, in fact we see the quite an uptick in Pending sales in this graph beginning towards the end of April.
Lastly, Check out this graph from Showingtime, which has access to almost 70% of all showing data, the number of showings in California has increased dramatically in the last few weeks. Buyers ARE indeed out looking for homes!
This is likely driven by mortgage rates, which as of May 15th, conforming 30 year fixed mortgage rates are averaging 3.09% and 15 -year rates are near 2.75%. Rates we thought we would never see again.
According to the law of Supply and Demand, one of two things would need to happen before we see home prices start to drop. One, we see more . . . A LOT… more homes come on the market. Or two, buyers start to pull back from home purchases which in turn would increase the inventory.
We don’t see either of those happening soon, therefore we will NOT likely see home prices coming down in San Diego County. This could however change depending on how this pandemic plays out.
We are keeping an eye on the data and will continue to push it out to you. Please feel free to share this blog and don’t forget to subscribe yourself to get notified when more information comes out.