December 2022 - San Diego Real Estate Market Update
Happy Holidays! This month’s market update is going to be short and sweet. The question on people’s minds this time of year is simple: What is the real estate market going to look like in 2023?
Inventory will begin to pick up in January moving towards its Summer peak. On a seasonally adjusted basis, inventory will remain very low throughout 2023 as homeowners will continue to choose not to move unless they need to.
Interest rates will begin to come down slightly, but will likely remain elevated enough to continue to suppress buyer demand due to affordability concerns. This will result in fewer and less intense bidding wars and homes selling for below asking price.
Homes will stay on the market longer than they have over the last couple of years. In 2020, 2021 and the first half of 2022, homes sold within days. The time on the market will now be commensurate with the desirability and mass appeal of a home.
Prices will likely continue to decline slightly, but don’t expect a crash or a steep drop in prices due to low inventory.
There will not be a wave of foreclosures or short sales as the majority of homeowners have affordable mortgages with low interest rates and high equity despite home price declines.
We will likely see recession conditions in the US in 2023 due to the Fed’s current financial policy aimed at restricting consumer spending. Jobs and wages reports have remained strong and despite inflation, consumer spending has been stable thanks to unprecedented savings rates. For these reasons, it’s unlikely that a recession would be deep or long lasting.
If you’re a homeowner
If you’re in a home and happy there, all is well. You likely have a great deal of equity which is fairly stable and a great fixed-interest rate mortgage. You can expect your home to surpass its record-high price within 5-10 years if not earlier, according to traditional real estate market cycle models.
If you’re a hopeful homebuyer:
Because mortgage demand is low right now, banks and lenders are competing for your business. This competition is great for you - there are tons of programs offering rates that are lower than industry averages including fixed-rate and adjustable-rate options. If you have been sidelined by bidding wars over the last couple of years, now is a great time to take advantage of lower homebuyer competition. If you’re open to putting in some work, you need to shop around for the best rate and be open to homes that need some work as there are deals to be found for the first time in a few years.
If you’re thinking of selling:
It’s true that prices have come down since they peaked in May 2022, we’re back to the prices we were seeing in June of 2021 and prices will likely continue to decline in 2023. If you’re thinking of selling in the next year, it’s better to list your home sooner rather than later. It is also true that buyer competition is lower, which means that it’s more important than ever to market and price your home properly in order to sell quickly and for the most money possible. There are still very few homes for sale so it’s important that your home stands out among them to be buyers’ first choice. That being said, market times are longer than they have been since the pandemic housing boom and you should expect fewer offers than you would have before things began to slow down. You need an outstanding real estate pro in your corner to help you price, market, and negotiate on your behalf.
Most importantly, if you have questions or concerns about your specific situation… CALL ME to help sort through them. That’s why we get up in the morning - not just to sell homes, but to serve our clients.
As always, we will be here to continue to provide you with updates about the housing market and answer any and all of your questions. Feel free to reach out to us anytime.
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