In December, I was seeing internet headlines of “Cyclone Storm to Hit Tahoe!” My close friend, Cassidy in South Lake Tahoe said that the internet was overreacting; it was “just another storm” she said.
Similarly, I have been seeing headlines of “Recession to Hit in 2023! Click here!” and “Housing Market to Collapse! Click Here!” Well, where is this recession? I am not sure I trust these headlines.
Last week’s jobs report was one of the strongest on record, creating nearly 600,000 jobs for the previous month and lowering the unemployment rate to 3.4%, the lowest since 1960’s. Of course the current inflation is causing great difficulty for local residents, especially people in the lower income brackets, but there is evidence that inflation may be waning as the stimulus winds down, and liquidity (cash in the bank) quickly decreases for citizens and businesses.
The big issue I follow, besides the economic metrics, is the housing market, both volume and prices.
In the early 2000’s, Congress wanted everyone that wants to own a home be able to take out a mortgage and the government pushed aggressively for no-money-down loans, no income documentation loans, etc. The result in 2007 and 2008 was that millions of homeowners with little or no equity in their homes, walked away from their properties, causing a glut of homes for sale all at once. Laws required banks to resell foreclosed homes quickly and of course home prices significantly dropped for a few years in response.
Today, that condition is not present; in fact it’s the opposite. Most homeowners are loaded up with equity currently and sitting on an interest rate below 4%. People in a cash crunch are borrowing against their home instead of selling their home.
The issue currently is no one wants to sell.
Homeowners are staying put, enjoying their equity and low fixed interest rate. Inventory is at an all-time low but some buyers are still buzzing around, kicking the tires and making good offers for the few good properties that come on the market. Interest rates are down from the low 7’s in October to the low 6’s currently, and some 5, 7, or 15 year mortgages are in the 5’s, historically low. Home prices are remaining fairly steady actually and some properties are receiving multiple offers currently.
Notice headlines that say “Home SALES are dropping”. Yes, less homes are selling due to the low inventory available. But home PRICES are fairly steady with only a slight decrease in price from the highs of last summer. Many homes are selling somewhat quickly with 30 to 60 days on the market.
If the inflation rate steadily declines over the next year, the economy should remain fairly strong with more buyers entering the market.
Our local San Diego economy continues to grow with international people moving here and health and tech sector businesses continuing to expand. The demand for skilled workers in San Diego remains strong. These high paid workers prefer to own homes and will keep the demand for properties here high. I remain optimistic for our economy and housing market going forward. Demand for housing grows but our supply of housing is fairly fixed, with little new housing being built.
Contact me with any questions on buying or selling property here in San Diego.
For the market report, I used a year-over-year growth rate for the median home price.
MARKET REPORT (Single Family): College Area (92115): median price up 15.5% year over year to $895,000. San Carlos (92119): median price up 14% to $1,000,000. Del Cerro/ Allied Gardens (92120): median price up 14% to $1,060,000.
—Sarah Ward is a REALTOR with Fine & Coastal Real Estate. Visit her at: fineandcoastal.com.
Photo credit: Pixabay.com
