In the San Diego, California Housing Market, Low inventory, that’s the number one thing I’m hearing these days in San Diego real estate markets. Low inventory is driving home prices up, and putting many home buyers into bidding wars, where, if they are not savvy, they often lose.
What exactly does low inventory mean in the san diego real estate market? Inventory is the amount of houses for sale that are actively listing on the MLS. Currently in we have about a one-month supply of homes for sale. That means if no new homes came on the market, then there would be no homes available to buy in one month from now. Looking at san diego real estate market statistics, a “normal” housing market would have inventory levels of three to six months.
What Does That Mean?
In San diego real estate news, our current inventory is about one-sixth of the normal market, it means that there is more competition for the properties that are available. As a buyer, you need to be ready to move fast when you find a home that matches your goals. At the same time, prices are going up due to basic economics: supply and demand. As of today, in the San Diego housing market there are 29% LESS homes for sale than this time last year.
Rent prices are down slightly from February in Los Angeles, San Francisco, while rents rose in San Diego, San Jose, and Anaheim. This could encourage some buyers to continue renting vs buying.
According to Realtor.com, prices continue to climb due to the lack of inventory.
- National inventory declined by 52.0% over last year.
- Newly listed homes on the market declined by 20.0% nationally and by 17.9% for large metros over the past year.
- The March national median listing price was $370,000, up 15.6% compared to last year. Large metros saw an average price gain of 12.1% compared to last year.
- Nationally, the typical home spent 54 days on the market in March, 6 days less than the same time last year.
Housing Market Experts are Shocked
In most U.S. cities, home buyers who enter the housing market in 2021 will find themselves competing for limited inventory. There just aren’t enough homes to go around. But many of these buyers (and especially the first-timers) don’t have a frame of reference to put it all into perspective. It’s all new to them.
But even the industry veterans are surprised by the current inventory shortage affecting the U.S. real estate market in 2021. Jeffrey Mezger, president of KB Home and a 40-year veteran of the housing industry, recent told CNN Business:
“It’s crazy. There is no inventory … It’s a good time to be a homebuilder.”
A good time indeed. KB’s profits grew by more than 60% during the first quarter of 2021. But builders and developers aren’t the only ones thriving. It’s also a good time to be a “regular” home seller. In many real estate markets across the country, the ongoing supply shortage has made it incredibly easy to sell a house.
A Different Scenario from the Last ‘Boom’
In terms of home sales and price growth, the U.S. is currently experiencing a kind of housing market boom. But it’s completely different from the last time around.
During the mid 2000s, the country also experienced a surge in home-buying activity. It was partly fueled by lax lending standards, which isn’t a factor today. There was also a huge increase in new-home construction back then. But construction has lagged behind demand for the past few years.
On top of that, many would-be sellers are reluctant to list their homes out of fears they won’t be able to find another one. They’re reading the same news stories. They understand the situation. And a lot of them are staying put, at a time when they might otherwise be inclined to sell.
Buying a Home in a Tight Market
Due to the shortage of housing market inventory, home buyers in many U.S. cities will encounter challenges in 2021. That doesn’t mean you can’t succeed in this kind of market. You can. You just have to be realistic. Patience and persistence go a long way, as well.
You also have to know the “tricks of the trade” for buying a home in a low-supply environment. One of the trends we’ve seen over the past few months is buyers waiving certain contingencies to make their offers more attractive to the seller.
A contingency is basically a requirement for the sale. They’re usually written into the purchase agreement. One common example is the home appraisal contingency. This provision gives the buyer a way to back out of the deal, if the property appraises for less than the agreed-upon purchase price.
Home inspection contingencies are also common. Or at least, they used to be. In many housing markets across the country, tight inventory and strong demand have led buyers to waive such contingencies. They’re offering more — and asking for less — in an attempt to get the seller’s attention.
What’s the Solution?
One solution is to have more homes built in San Diego County. With tighter restrictions on land use and the cost of building supplies going up, New Home Sales in San Diego are slower than many other areas. If you are thinking about buying a new home in San Diego, North County San Diego, or Valley Center, make sure to get the information early so you can have early access to the waiting lists. Contact me to find out which new homes are going to be built in 2021.
Another solution is for more home owners to capitalize on this housing boom and sell their homes. There are many concerns for home sellers right now, but as more people are vaccinated, hopefully that will loosen up. Additionally many home owners are afraid they won’t be able to find a home to move to. That’s why our team is using unique tactics to locate off market homes in neighborhoods our home buyers love.
Interest rates continue to be low, which is favorable if you want to buy a home in 2021. It’s more important than ever to have a plan of action and guidance on what kinds of offers are being accepted in this tight market.
If you have thought about selling and are just not quite sure, make sure to learn about your options to see if it’s a good choice for you. I’m always available to answer questions and help make a road map to selling your home successfully.