San Diego Housing Market Update for September 2014

What is happening with the housing market? That is a big question right now all across the country. Of course, it is not truly possible to give an answer that will cover all parts of the country. Let’s look at San Diego County and focus on some of the things that are affecting home sales.

Prices are stabilizing. Prices soared across the county during the summer months. Now that summer is practically over most industry experts and commentators expect that prices will stop rising at such a quick rate and we will return to a more “normal” housing market. Many real estate agents, including myself, seem to agree. According to Zillow, San Diego home prices rose 9% in the last year and will continue to rise 3.8% in the next year.

Interest rates remain low. Rates are still very low, in fact they are the lowest in years (hovering around 4.1% this week on a 30 year fixed mortgage). Many factors contribute to this, including geopolitical instability, but the fact is that buyers can still take advantage of some great mortgage products. If inventory continues to increase this should stimulate sales.

Inventory is rising. Inventory this summer finally rose out of the doldrums. Currently San Diego County has close to a 4 month supply of inventory. As of mid-August, housing inventory had increased 14.3% since the same time last year, providing more choices to buyers.

Pending home sales show slight improvement. Pending home sales have been down year to year since 2012, but the decrease in July was smaller than the average over the last six months, indicating that pending sales may be on a slight increase, this according the the California Association of Realtors. Whether this trend will continue as we head into the holiday season is unknown, but there definitely are certain parts of the county where agents feel more homes are starting to go into escrow. Pending home sales are an indicator of future home sale activity.

Buyer’s market: coming soon? If rates continue to stay low and prices stabilize, the market will likely slowly shift to a buyers’ market. Some areas are seeing that effect already, and it seems pretty inevitable that we will move into that direction.

Of course there is no crystal ball for real estate, but all signs point to a market that is stabilizing and still in recovery. Indicators point to a more “normal” housing market moving forward, where sellers and buyers are on more equal footing.