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2nd Quarter 2023 Real Estate 🤪 Market Update


My quick life update before my market update (if you are not interested in my life shenanigans, scroll down to the good stuff below).


My wife and I had our 2nd baby girl, Ellyava on May 13th and we, of course, are in love with her and so is our 2 year old Adylina. Let's just say that they are keeping us busy. lol




 

Now let's get into some important updates from the last few months.....


If you own a house or a rental or know someone that does:

  • Short Term Rental Laws officially came into Effect on May 1st, 2023

    • Tier 4 Permit applications, for Mission Beach, are closed. There is currently a wait list of over 188 applicants.

    • Tier 3 Permits, which are for non-owner occupying properties renting for more than 20 days per year still have 1,283 applicants available in the City of San Diego. (this is actually quite shocking to me. I really thought that these licenses would be gone months ago)

    • Tier 1 & Tier 2 Permits are unlimited. The application process is open. This is for owner occupied properties of 1-4 units.

    • ADUs can not be rented as a short term rental unless built before September 2017.

    • To View All STR Regulations for the City of San Diego or to apply for a license, Click Here


  • Have you ever wondered what you might be able to additionally build on your property?

    • Search and discover what is possible on any property. Browse property and permit details. Apply for permits and rebates. Learn if an ADU is possible

 

If you are planning on selling or know someone that is thinking about it:

  • We started March with the median price for all of San Diego Country for all homes (attached and detached) at $780,000. It kept rising until mid-May and hit $845,000, after which it started reversing course and went down to $820,000 by mid-June. This is where I thought that the market will continue to drive prices down because the total available housing inventory started to go up at the end of April and has been going up since every week. The lowest it got was 2,133 on April 21st, and by end of June, it was at 2,602. Not a huge increase, of course, however, it's the trend that I pay attention to and when I see a trend of any kind, that's where I start making conclusions based on pure logic. However, logic has gone out the window over the last few years but, at times, I still want to believe that it's worth applying, and yet I was wrong when I thought that this trend would continue. The median price actually started going up again as of June 30th and we actually ended July 14th week at $841,000. Not sure what to make of all this except the fact that the real estate market is very resilient and buyers are still out there looking for homes to buy despite the higher rates! To put this further in perspective, the median price was at $740,000 first week of January of this year so it jumped by $100,000 total so far already! That's just wild!

  • Last year at this time, we got up to 5,166 homes active on the market after its steep climb from an all time low in the first week of January of 2022, which was 1,732. This graph shows you that even though inventory was increasing for most of the 2nd quarter of 2023, it's still doesn't compare to last year and definitely not even close to the numbers of pre-covid years.

  • To sum it up, 2nd quarter of 2023 was still definitely a seller's market, even though I have seen some homes sit on the market longer, but usually that meant it had some negatives, such as a busy road, no garage, small yard, etc. Lastly, for most of San Diego County, whatever value homes lost last year, they have regained that and even surpassed it in some regions in 2023.

  • The image below shows you a breakdown of how the median sales price by the end of June of this year compared to last year in June and it's also broken down by property type and even square footage. Really great data!

 
  • In conclusion, if you list now, still expect multiple offers in most cases in San Diego County and Southern California in general for that matter. Just don't count on the 10-15 offers that we got used to again for a few months this year. As always, this can change in 30 days, it's anybody's guess.

  • The image below shows you the movement of interest rates in all of 2023 so far and as you can see, we started April in the low to mid 6's, however, most of May, June and July, we have been fluctuating between 6.5% and 7%. What I find that initially when rates jump a half a point, there is a bit of a slow down for a few weeks as the buyers watch to see what happens next, however, once rates stay at the new high and stabilize for a month and longer, buyers start coming back into the market thinking that this is the new normal.

  • This is a great website to track rates: https://www.mortgagenewsdaily.com/mortgage-rates/mnd

  • As always, if you really want to geek out on all the San Diego County real estate data from June 2023, then click here for a full report.

Mortgage Rates from January 1st, 2023 to July 26th, 2023

 

If you are planning on buying or know someone that is:

  • Buyers were still out looking and submitting offers in quarter 2. There was a bit of a slow down beginning of June when rates jumped from low 6's to the 7's. However, like mentioned under the seller section, once about 30 days went by with rates staying at the new high, buyers were jumping back in and that's exactly what we are seeing still today. The buyers that we were working with in the 2nd quarter, we were competing against several offers on each property that our clients liked.

  • Offers at or above list price continued in quarter 2 so buyers had to be aggressive on their terms when writing contracts.

    • Here are a couple examples of those aggressive terms:

      • Buyers were submitting 7 day inspection contingencies and stating from the beginning that they won't ask for any repairs. (Inspection was for informational purposes only.)

      • Buyers were waiving appraisals (not always advised depending on the comparables; setting a cap is also a good option)


  • My prediction for what it's worth is that the market will start softening over the next couple months so buyers will have an easier time getting the properties they love under contract.

  • It looks like the "California Dream" that allowed buyers to get a 20% down payment assistance might be coming back in the fall. However, I don't expect it to be around and available for long.

    • Learn more about the program here: https://www.calhfa.ca.gov/dream/index.htm

    • Big take-away: It was a very popular program so when you see another roll out of this program or something similar, I suggest you reach out to us quickly so we can jump on it. Actually, you should start talking to your lender now and submit all your financials so they have everything on file and ready to get you locked into this loan when it becomes available. (You will need to have an offer accepted on a home, of course, at that time as well)


  • And as always, If you are planning on relocating to another state even though I would be sad to see you leave, let me know and I can help locate a great agent in whatever city that you are planning to move to. I will actually identify a couple great agents there, interview them on your behalf and connect you to that agent once I feel like he or she can serve you as I would here. (Bonus: I would stay involved over-seeing your purchase transaction on top of it for you and consult you along the way. That's if you value my opinion, of course.)


Have a fantastic 3rd quarter! Let me know if you have anything specific that you want to discuss with me. I am here to help you navigate through it all and yes, I would love it if you can refer me to anyone that is thinking about buying or selling. Thank you in advance!


Cheers


p.s. Thank you to our clients, Linda and Steve for this authentic review!




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