San Diego Housing Market Update & Predictions For 2024: What’s Happening With Rates, Prices & Inventory?
Are you wondering what’s going on with San Diego real estate this year? Our market is always evolving, so it’s important to stay up-to-date if you’re eager to achieve your real estate goals. From declining sales to stubborn interest rates and inflation, let’s take a look at the real estate trends that are shaping our market and what’s to come the rest of the year.
Inflation has accumulated to 20% over the past four years, but the market is beginning to show some resilience. Buyers are learning to adapt and continue to enter the market despite less-than-savory interest rates.
As for interest rate predictions, experts from Fannie Mae, the Mortgage Bankers Association, and the National Association of Realtors (NAR) predict that interest rates will end the year around 6.67%, with a slight decrease to 6.25% in 2025.
Additionally, a single rate cut is anticipated in September, which could provide some relief to potential buyers… finally!
It’s time to face the facts: the real estate sales volume has decreased nationally from an average of $3.4 million to $2.5 million over the last year. (That’s 27%!) This downturn marks the slowest market conditions in terms of sales volume since the 1990s.
However, there is a silver lining to this year’s market.
Experts are predicting a late-year surge in sales and expect 40% of 2024’s sales volume to occur in the final months of the year.
This anticipated surge indicates a robust finish to the year, offering exciting opportunities for both buyers and sellers.
First, let’s talk supply. Inventory levels are on the rise!
In fact, there are about 36.7% more homes available on the market compared to last year, according to Realtor.com’s senior economist Ralph McLaughlin.
This increase in inventory provides more options for buyers, making it an excellent time to explore the market and find the perfect home.
So, why haven’t home prices dropped with inventory on the rise?
Earlier this year, San Diego ranked No. 4 out of the 10 most overpriced housing markets in California with homes going for nearly 24% more than what they should be priced.
In May, the median price of a resale single-family home reached $1,001,500! A record high for San Diego County, joining only one other Southern California market, Orange County, in having prices top the $1 million mark.
Blame in on the sunshine or coastal breeze, but we still have enough demand in our market to prevent any sort of crash in prices.
Another factor contributing to high demand is ongoing rent hikes. That’s right, every year rent goes up, whereas your mortgage stays the same. So even though it may technically be more expensive to rent than buy today, locking in your housing costs is always a wise investment in the long run.
To put this into perspective: rental rates have increased 30% from 2020!
22 million people nationwide claim their rent is 30% of their income—and 12 million claim it’s 50% of their income.
Many young families are exploring homeownership as a hedge against inflation and looking at it as an opportunity to build their net worth over time. So despite the high prices, they are choosing to buy vs throw away money on rent, looking at it as an investment in their future
The market demographics are shifting in an exciting way. In fact, 31% of current buyers are first-time home buyers.
Millennials are largely leading the market right now, with 45.5 million who are in the “household formation” age. This wave of young buyers is creating a vibrant and dynamic future for real estate.
At San Diego Castles, we understand many of our clients are curious about how the NAR settlement will alter the upcoming housing market. So, let’s shed a little light on the situation.
What can buyers expect when it comes to agent compensation?
First things first, buyer agent commission has always been negotiable. That is something that has not changed, but where this conversation takes place is now up for debate. Buyer agent commission was typically stated on the MLS—and while listing advertising will still play a large part on the MLS, buyer agents are now expected to take these conversations offline.
This shift is an opportunity to enhance trust between real estate professionals and their clients. Agents are now encouraged to clearly present their value proposition, differentiate their professional skills, and ensure that compensation discussions are part of their client interactions. This emphasis on communication and trust-building sets the stage for stronger, more collaborative relationships in the industry.
For more information, you can visit NAR FAQs.
Navigating the real estate market may come with its share of challenges, but it also offers a wealth of opportunities for buyers and sellers. By staying updated on the latest real estate trends, you can make informed decisions that align with your goals. The market is ever-evolving and brimming with potential, and with the right insights, you can seize the many benefits it presents.
If you have any questions about the current housing market, don't hesitate to reach out to San Diego Castles Realty. We're here to guide and inform you every step of the way—it’s your move!
***This information was sourced from the webinar: Brian Buffini’s Mid-Year 2024 Bold Predictions which originally aired on July 22nd. Watch the replay to learn more about the current real estate market and the stats referenced in this article.
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