HOW’s THE MARKET?
October 2024
The Federal Reserve's recent decrease in the benchmark funding rate in September led to a reduction in mortgage interest rates allowing homebuyers to benefit from lower monthly payments. However, a lot of it was already baked into mortgage interest rates in August prior to the Fed’s September announcement. Rates ticked back up slightly by mid-October and have leveled off. As rates decline in line with economist predictions, demand for housing may increase, potentially revitalizing the housing market. Looking ahead, if the Fed continues to lower rates or holds them steady, mortgage rates are likely to remain favorable, supporting home sales and refinancing opportunities for the rest of the year.
At the start of October, the San Diego real estate market overall began experiencing the typical seasonal slow-down trends of Fall. The median price peaked in June ($920,000) and has been decreasing ever since and reached $872,000 by the end of August (about a 5% decrease). Values could continue to fall through December.
Why?
The gap between new supply and demand is still wide. Inventory has been on the rise all year, with approximately 5,000+ active listings currently on the market (3-months supply) as of today Sept 30th, 2024. Properties are staying on the market longer while fewer new listings are coming to market, a trend that should continue as we approach the holidays. Inventory should start to drop towards the end of October through the rest of the year.
What does this mean?
Buyers
Buyers have the upper hand for the rest of the year; there are deals to be made on homes that have been sitting for 3-4 weeks plus. If you were considering a home or investment purchase, NOW is an amazing time to shop because you have less competition, better rates, and a ripe environment for negotiating prices down. I’m in escrow with a client right now on a property for $20K below list price in Pacific Beach.
Sellers
Although sellers may appear to have more competition right now, remember that a lot of it is stagnant inventory, not new listings. So is that really competition? (There is also a new “shadow” pool of buyers on the market excited about the lower interest rates who are ready to buy this fall or primed for early 2025.) What I am seeing: If you price your home right and market it well (prep, repairs, staging etc) your home should move at a strong price - it just may take a little longer. The more desirable communities in San Diego remain competitive. The last two offers I wrote we competed with multiple offers.
So if you are considering a move or sale before the end of the year, let’s talk and see if now is the right time for you.
By January/February 2025, Sellers will have the advantage again. I anticipate that buyers will start to come out in droves in January, so values will bounce off the bottom from there.
*Many key figures and points of analysis were sourced from "The Real Report" newsletter published by Brian Daly.