The State of the San Diego Housing Market in The Third Quarter of 2014
What does the San Diego real estate market look like in the second half of 2014?
What do the statistics show is happening in the San Diego housing market? How do the home sales and apartment rental markets differ? What’s the outlook for the rest of the year, and what does it all mean for prospective SoCal home buyers, sellers, and renters?
2014 San Diego Real Estate Statistics:
U-T San Diego recently ran a feature story on how local home sales have slipped year-over-year, but every other indicator appears to paint a picture of a steadily improving market. According to the National Association of Realtors and San Diego Real Estate Buzz:
- Sold listings are actually up from 1,769 in January 2014, to 3,015 in May
- Active listings are up by almost 3,000 units year over year to June 2014
- Average days on market for both attached and detached home listings are at their lowest point since January 2013
- The median home sales price is up to $499,250
- Mortgage interest rates continue to hover at incredible lows
Experts all remain bullish on San Diego County’s housing market rebound. Experienced investors and analysts recognize that any recent blips are the result of typical seasonal changes, and the process of working through the remains of distressed inventory. This opinion has been echoed in the media by the president of the Greater San Diego Association of Realtors, local university real estate professors, building planners and home builders. All indicators reflect a healthy market, and a normalized, but upward trending market.
San Diego’s Rental Market
The San Diego rental market is proving to be incredibly strong. According to the San Diego County Apartment Association, it hasn’t been this tough to find somewhere to rent in the SoCal county for 12 years. As of June 2014, the apartment vacancy rate was down to 2.8%. This is down almost 50%, from 4.5% last year. This is only trumped by the 2002 low of 2.5%. These units are in demand by both young professionals splitting rent, and families with kids. Average rents for June stood at:
- $901 per month for a studio
- $1,092 per month for a 1 bedroom
- $1,347 per month for a 2 bedroom
- $1,716 per month for a 3 bedroom
What’s Ahead for the San Diego County Housing Market?
Although there may be small seasonal fluctuations over the remainder of 2014, the overwhelming opinion is that the market is headed up, firing on all cylinders. While the volume of home sales may remain moderated by supply, they should remain strong. More inventory ought to come on the market as home prices continue to rise, lifting more homeowners out of underwater situations.
The one dynamic which is likely to have the most impact on the market is interest rates. As mortgage rates rise, more pressure will be put on home buyers and sellers to take action, fast. This time next year, we’ll likely see an even tighter rental market, higher home prices, and potentially even fewer average days on market.
What it means for San Diego Home Buyers
So what do all of these trends and statistics mean for San Diego County home buyers?
Now is an amazing time to buy a home in San Diego. It is likely the best buyers will see for at least another 2 decades, if not their entire lifetimes. Dwindling inventory, more buying because they simply can’t find a place to rent, and real estate investors continuing to soak up as much property as they can while rates are low, will make it increasingly competitive to buy homes for those that drag their feet.
What it means for San Diego Home Sellers
For San Diego homeowners, the second half of 2014 is also a prime time to sell. Rising values may well be ahead, but waiting could mean missing out on the optimum moment to buy a new home. This applies to those both moving up and down. Rising interest rates could quickly diminish any gain to be had by waiting to sell a home in 2015, and they will also hamper price growth and limit the buyer pool that may be able to purchase, and qualify for home loans. Do the math carefully, before deciding to wait to sell.
What it means for San Diego Real Estate Investors
San Diego County real estate investors couldn’t ask for better conditions. The market is ripe for selling to restructure portfolios. New financing options have emerged to aid property investors in expanding their rental portfolios quickly, and locking in great passive income, and wealth building opportunities. Those flipping houses will also benefit from quick turnover, and a boost from rapidly rising prices.