Record-High Prices Amid Low Inventory and High Demand in San Diego | May 2024

The San Diego County housing market has reached new heights, with the median price for single-family homes hitting an all-time high of $1,085,000 in April 2024. This surge in prices is primarily driven by low inventory and high demand, despite higher mortgage rates. Here’s an in-depth look at the current state of the market and what it means for buyers and sellers.

Record-High Prices for Single-Family Homes

San Diego County has seen a remarkable rise in the median price for single-family homes. In April 2024, the median price hit $1,085,000, surpassing previous records. Typically, home prices peak during the summer months, and this year seems to be no exception. Experts predict that prices will continue to climb, potentially setting new records each month during the first half of the year. Condo prices are also on the rise, now only $1,500 below their August 2023 peak, and are expected to reach new highs soon.

Impact of Mortgage Rates on the Market

While high mortgage rates usually dampen both supply and demand, the San Diego market has shown resilience. Homebuyers have been able to tolerate rates above 6%, but with rates now exceeding 7%, a slight slowdown in sales is anticipated. This potential slowdown could actually benefit the market by allowing inventory to build, addressing the current undersupply issue.

Inventory, Sales, and New Listings Trends

Inventory for both single-family homes and condos has been on a roller-coaster ride over the past few years. From August 2022 to March 2023, inventory levels trended downward, but they stabilized from March 2023 onward at low levels. Despite this, there has been some positive movement recently:

- April 2024: Inventory, sales, and new listings for single-family homes and condos rose compared to previous months. New listings increased by 7% month-over-month, while sales rose by 9%.

- Year-over-Year Trends: Inventory is up by 9%, and sales have increased by 3%.

These trends suggest a growing but still insufficient supply to meet the high demand in San Diego County.

Months of Supply Inventory Indicates a Sellers’ Market

The Months of Supply Inventory (MSI) is a key metric that measures the supply/demand balance in the housing market. A balanced market typically has an MSI of around three months. Here’s how MSI has fluctuated:

- First Quarter Last Year: MSI fell below three months, indicating a strong sellers’ market.

- March to August 2023: MSI remained fairly stable.

- August to November 2023: MSI ticked upward.

- December 2023 to April 2024: MSI declined again, reinforcing the sellers’ market status.

Currently, the MSI suggests that the market favors sellers, with more buyers than available homes.

What This Means for Buyers and Sellers

For sellers, the low inventory and high demand create a prime opportunity to list homes, especially if they are priced right. With prices expected to continue rising, now is an excellent time to take advantage of the market conditions.

For buyers, the competitive market means acting quickly when a desirable property becomes available. Working with a knowledgeable real estate agent can help navigate the challenges of limited inventory and rising prices.

The San Diego real estate market is experiencing a dynamic period with record-high home prices driven by low inventory and high demand. While higher mortgage rates might slow sales slightly, the overall market remains strong and favors sellers. As we move through 2024, monitoring inventory levels and price trends will be crucial for both buyers and sellers to make informed decisions. Stay tuned for more updates and insights to navigate this ever-evolving market.