Understanding the San Diego Real Estate Market: August 2024 Update

Understanding the San Diego Real Estate Market: August 2024 Update

July was an eventful month for the real estate market in San Diego. From the Fourth of July celebrations to the Federal Reserve's decision to maintain interest rates, there has been a lot to digest. This month’s market update will delve into the key metrics that shape the San Diego real estate market, provide insights into current mortgage rates, and offer valuable tips for both buyers and sellers. By the end of this blog, you'll have a clearer understanding of where the market is heading and how you can navigate it successfully.

San Diego Real Estate Market Data for July 2024

Let's start by looking at the essential metrics that define the San Diego real estate market: median sales price, days on market, and inventory of homes for sale.

Median Sales Price: A Slight Dip but Steady Growth Year-Over-Year

The median sales price is often the first thing people look at when assessing the health of the real estate market. In July 2024, the median sales price for single-family homes in San Diego was $1,582,000. This represents a slight decrease from June’s median of $1,589,000. However, when we zoom out to look at the year-over-year data, we see a consistent upward trend. In July 2022, the median sales price was $955,000, and in July 2023, it was $990,000. This steady increase over the past three years suggests a resilient market despite the monthly fluctuations.

For condos and townhomes, the median sales price in July 2024 was $700,000, up from $695,000 in June. Like single-family homes, condos and townhomes have seen steady year-over-year growth, increasing from $625,000 in July 2022 to $641,000 in July 2023, and now to $700,000 in 2024.

While month-over-month changes can provide insights, they are often influenced by various factors, including seasonality and inventory levels. Therefore, it's essential to focus on the year-over-year data to understand the broader market trends.

Days on Market: Homes Are Still Selling Quickly

Another critical metric to consider is the average days on market (DOM), which indicates how long it takes for homes to sell. In July 2024, the average DOM for single-family homes in San Diego was 29 days, slightly up from 27 days in June. For condos and townhomes, the average DOM was 30 days, also an increase from the previous month.

While these numbers show a slight increase in the time it takes for homes to sell, they are still well below the 30-day mark, indicating a healthy and competitive market. It's essential to remember that even slight increases in DOM can be influenced by factors such as the quality of the listings and buyer sentiment.

Inventory of Homes for Sale: A Slight Decrease but a Strong Market

The inventory of homes for sale is another vital indicator of market health. In July 2024, the inventory for single-family homes was 2,741, down from 2,800 in June. For condos and townhomes, the inventory was 1,772, a slight decrease from 1,800 in the previous month.

While the inventory has dipped slightly, it's crucial to understand that this doesn't necessarily signal a market slowdown. In fact, lower inventory levels combined with steady demand can often lead to higher prices, as buyers compete for a limited number of homes.

One significant factor affecting inventory is the "mortgage jail" phenomenon, where homeowners with low-interest mortgages are reluctant to sell and take on a new mortgage at a higher rate. This trend could continue to limit the number of homes available for sale, further tightening the market.

Current Mortgage Rates and Their Impact on the San Diego Real Estate Market

Mortgage rates have been a hot topic this year, with many predicting significant changes that have yet to materialize. In July 2024, the Federal Reserve decided to maintain the federal funds rate at 5.25% to 5.5%, despite earlier predictions of rate cuts.

The Impact of Mortgage Gurus' Predictions

Throughout the year, various "mortgage gurus" have made bold predictions about rate cuts that never came to fruition. This has caused frustration for many potential homebuyers who delayed their purchases in hopes of securing a lower rate. Unfortunately, while these buyers waited, home prices continued to rise, increasing by about $100,000 since January 2023.

This serves as a reminder that relying too heavily on predictions can be risky. Instead of waiting for the perfect moment, it may be wiser to act based on current market conditions and secure a home before prices rise even further.

Recent Trends in Mortgage Rates

In July 2024, mortgage rates showed some volatility. After peaking at 6.95% on July 3rd, rates began to trend downward. By the end of the month, the average rate for a 30-year fixed mortgage had decreased slightly, offering some relief to potential buyers. However, it’s essential to note that these rates can fluctuate daily, so staying informed and working closely with a lender is crucial.

If you purchased a home in September 2023 and took advantage of a temporary buydown, now is the time to contact your lender. As the buydown period ends, your mortgage rate will revert to the original rate, which could impact your monthly payments.

Tips for Buyers and Sellers in the San Diego Market

Navigating the San Diego real estate market requires strategic thinking, whether you're buying or selling. Here are two essential tips to keep in mind:

Tip 1: Selling Your Home for More – It's Not Just About the Price

When it comes to selling your home, many people focus on getting the highest price possible. While this is important, it's equally crucial to manage your costs. One of the most significant expenses in selling a home is the real estate commission. By working with a realtor who offers a flexible listing program, you can potentially save thousands of dollars in commission fees. For instance, with a median sales price of $1 million, saving just 1% on commission could save you $10,000.

Check out our Flexible Listing Program to learn more about how you can reduce your selling costs.

Tip 2: Building a Strong Home Buying Team

San Diego is one of the most competitive real estate markets in the United States. To succeed, you need a well-oiled team, including a skilled realtor, a reliable lender, and a thorough home inspector. Your team must work seamlessly together to ensure a smooth transaction and help you secure your dream home.

Avoid the temptation to shop around for the lowest mortgage rate without considering the quality of service. Working with a lender who understands the local market and can close deals quickly is often more valuable than saving a fraction of a percent on your interest rate.

Understanding the Real Estate Industry's Shifts

The real estate industry is undergoing significant changes, particularly in the areas of contracts and industry practices. For consumers, this can be both confusing and concerning. However, it’s essential to work with real estate professionals who prioritize transparency and education.

As the industry evolves, you may encounter new requirements, such as signing buyer representation agreements. While these changes may seem daunting, a knowledgeable realtor can guide you through the process and ensure your best interests are protected.

Conclusion: Stay Informed and Act Strategically

The San Diego real estate market remains robust, with steady growth in home prices and relatively low days on market. However, the market is also in flux, with changes in mortgage rates and industry practices influencing buying and selling decisions.

Whether you're looking to buy or sell, staying informed and working with a skilled team of professionals is crucial. By understanding the current market trends and anticipating potential changes, you can make strategic decisions that will benefit you in the long run.

For more insights and updates on the San Diego real estate market, be sure to subscribe to our newsletter and follow us on social media. And as always, feel free to contact us with any questions or to discuss your real estate needs.