During the past month, national news media stories raved about the San Diego “Hot” housing market in 2022.
Let’s explore some of these news stories.
KEY TAKEAWAYS
San Diego broke records for the many “All Cash” home purchases in 2021.
San Diego County hit new medium home price at $750K.
72% of San Diego homes received multiple offers.
San Diego County homebuilding will increase in 2022.
San Diego Housing Market Forecast in 2022.
Due to the end of the foreclosures moratorium in San Diego County, home prices may drop in 2022.
San Diego Hot Housing Market in 2022
Based on how well the San Diego housing market performed in 2021, experts should be predicting one just as strong in 2022. However, certain events in 2022 may cool down the market into 2023. We will explore those upcoming events later.
First, let’s look at how well 2021 went for the San Diego County housing market.
San Diego Cash Sales Break Records
The San Diego Union-Tribune reported on December 30, 2021, that: “Cash sales of San Diego homes hit their highest level in 7 years”.
The Tribune quoted Attom Data Solutions that “26.8 percent of San Diego County homes were purchased with cash during the third quarter in 2021”.
This indicated heating competition in San Diego’s real estate market forcing buyers to offer all cash instead of financing to beat out competitors. San Diego experienced multiple buyers competing for each house.
The Redfin Data Center reported around 4,100 homes for sale during the third quarter which was much lower than the 5,300 in 2020 and the 7,850 in 2019, and 9,350 in 2018.
Attom Data Solutions found that cash offers increased by 15.4 percent over the same period a year ago.
Sellers prefer all-cash offers over mortgage financing because they close faster without any red tape causing delays or failure to finance.
With fewer homes for sale buyers competing against others offered all cash to sweeten the offer. Other buyers relying on traditional mortgage financing were left out because their offers were contingent on loan approval.
Cash offers also avoid lender-required appraisals and inspections which slows down the closing process. Sellers save a month or two before closing with a cash buyer over a buyer requiring a loan. Cash is King in real estate sales!
San Diego County Hits New Medium Home Price at $750K
KUSI News San Diego on December 17, 2021, that: “San Diego County’s median home price hits new high: $750K”.
Local prices rose 15.4 percent in a year and the new median including new and resale condos, single-family homes, and townhouses exceeds the peak of $749,750 which was a record high.
The San Diego Union-Tribune also reported the median home price hit $750,000 in November due to increased buyers competition. The Tribune summed it up:
“Competition for a small number of homes for sale and strong demand continues to put pressure on prices”. In essence, limited inventory forced buyers to make offers above the asking price which drove up average prices.
Even rising interest rates didn’t deter buyers. Freddie Mac reported that fixed-rate mortgages rose from 2.77 percent a year ago to 3.07 percent in November.
Local real estate agents bemoaned recent offers as much as 10% above the listing price ($550,000 for a $500,000 listing) were getting rejected by sellers. Some homes had 12 buyers competing against each other.
Redfin reported that in November 64.5 percent of listed homes went off the market within two weeks. That was up from 54 percent by the end of summer.
Some homes in San Carlos and Rancho Peñasquitos experienced an average of only 11 days on the market before selling. That contrasted with downtown San Diego where homes stayed on the market for an average of 110 days.
72 Percent of San Diego Homes Got Multiple Offers
According to Architect News: “Redfin claims 72 percent of San Diego homes receive multiple offers”.
Architect News claimed, “72% of properties within the San Diego metropolitan area obtained multiple offers in November making it the third most aggressive market in the country”.
Redfin’s research showed San Diego’s market as the most aggressive in California
A typical example occurred with a Ramona Realtor who listed a 1,824-square-foot, four-bedroom home in Ramona for $659,000. He got six offers within four days with three of them greater than $700,000 with the best one for $710,000. That’s a winning offer of $51,000 over the list price.
Architect News concluded by predicting that 2022 San Diego costs will become lower. Yet, “San Diego will probably remain a scorching market because San Diego is a ravishing place to live”.
San Diego County homebuilding increases 2022
The San Diego Union-Tribune reported in December 2021: “San Diego County homebuilding is increasing”.
The San Diego Association of Governments (SANDAG) predicts San Diego housing needs of around 21,000 homes a year. In 2021, Lori Holt Pfeiler, CEO of the San Diego County Building Industry Association stated (BIA of San Diego): “We met about half the need”.
2022 looks towards doubling the 2021 housing construction.
Yet, “Nathan Moeder, a principal with local real estate analysts London Moeder Advisors, said an ideal construction number for San Diego County would be 12,000 to 13,000 homes a year just to keep up with population growth.”
However, Moeder also stated that 20,000 to 30,000 housing units a year are needed in San Diego County.
San Diego Housing Market Forecast in 2022
The California News-Times reported: “The 2022 Market Forecast for Real Estate in San Diego”. The Times pointed out: “The average price of homes in the city went up by almost 25%, reflecting the country’s second-fastest growth”.
However, the Times predicts: “With the foreclosure moratorium ending in September, it’s expected that many people will be forced into considering distressed sales to pay off the banks. This means that prices in 2022 and possibly extending into 2023 may go down.”
The Times concluded: “There is massive diversity in the housing market in San Diego today, with buyers ready to pay more than the asking price for houses while many others are facing the threat of foreclosure. However, things should start to even out throughout 2022 when the effects of ending the moratorium are realized.”
To Summarize San Diego’s Housing Market in 2021
The Times praised San Diego for becoming a “hot” housing market in 2021 resulting in the country’s 2nd fastest growth.
However, the California foreclosures moratorium ended last September. Yet, California Governor Newsom extended eviction protections to deny court actions until after March 31, 2022.
Thus, starting in April high numbers of expected home foreclosures in San Diego will lower the average sales prices in 2022 that may extend into 2023.
San Diego Hot Housing Market in 2022 – Conclusion
The expected San Diego hot housing market in 2022 is based on its high performance in 2021.
San Diego experienced a “Hot” housing market in 2021 becoming the 2nd fastest growing market in the country. The highlights of these achievements include:
San Diego broke records for the many “All Cash” home purchases in 2021;
The new medium home price reached $750K in 2021; and
San Diego home sellers were overwhelmed as 72% of homes received multiple offers.
However, 2022 and beyond may experience lower home prices starting in April with the expected foreclosures moratorium ending. This means lower-priced forced sale homes hitting the market.
In addition, new housing construction will increase in 2022 creating a larger supply of homes for sale.
List for Sale Now before April Showers with Many Foreclosures
As mentioned above, the statewide moratorium of foreclosures is due to expire on March 31, 2022. If this occurs, many foreclosures forced sales homes will drive average prices down.
SoCal Lifestyle Realty has Realtors ready to list your home for the highest price before the anticipated April foreclosures begin.
Contact us for a Free Comparative Market Analysis of the nearby recently sold homes similar to yours. This will help us to list your home at the highest fair market price.