What does the San Diego real estate market look like in October of 2021? Kyle Whissel looks at the statistics and compares the housing market in 2021 to the real estate market in 2020 in San Diego. The number of new homes coming onto the market is down, as well as the number of pending homes. Kyle Whissel explains exactly what this means to you if you are looking to buy or sell your home.
October 2021 San Diego Housing Market Update
Kyle with the Whissel Realty Group shares a little bit about what's going on in the market, and this is a big change from where we were just a few months ago.
Now, if you've ever watched any of our videos, we always want to focus on the leading indicators, the things that are happening today that the traditional media is not going to report for two, three, four months from now.
With that said, one of the biggest things that we like to focus on is the number of new homes coming on to the market for sale. Now, the media talks about how many closed, but what closed last month actually went pending a month or two before that. So the media's always reporting stuff that's two or three months delayed. That's not what we do. We talk about the info today, what's happening, so you can make an educated decision long before the media reports what you're doing.
The number of new homes on the market. That is down roughly. 24%. There are a lot fewer homes coming onto the market today than there were one year ago. Now, this one's a little bit interesting. I've actually kind of racked my brain a little bit trying to understand why are there so many fewer homes coming on the market for sale. I think it's a few things. One, last year in 2020, our heavily COVID affected year, not many people sold their homes during the spring and the fall, or the spring and summer season. That was when COVID was brand new. Everybody was extremely scared, and nobody was really selling their homes. But if you think back to September of 2020, we kind of stabilized a little bit. We started figuring out what COVID is. Numbers started to decline. People got a little bit more comfortable, and all those homes that should've hit the market in the spring and in the summer started hitting the market in September, October, November. So I think there were a lot more homes on the market last year than there normally would be that time of year. And so when we talk about being down 24%, are we really down? I don't know that we're down so much, right? I think we're about where we should be right now. But in comparison to a year ago, we're down 24%. So just keep that in mind.
The second number we want to look at is the number of homes that have gone pending or gone under contract. That is down about 12%. Same thing last year versus this year. Same net effect on it. But now what's happening when new homes are down 24%, pending homes are only down 12, what that's done is that's contracted the overall number of homes for sale. 24% less came on the market. Only 12% less came off the market. There's a 12% delta, or variance, there, which means you had more contraction of the supply of homes for sale. In fact, we're down 56% from one year ago.
Third, the supply of homes for sale. We're actually at the lowest level of supply that I've ever seen. We're at 0.8 months of supply of homes for sale. That's roughly, what, three weeks? Maybe a little bit less than three weeks. Maybe a little more than three weeks. Somewhere around there. But what that effectively means is if no homes came for sale, in 0.8 months we would be out of homes for sale based on the rate of sale right now. So that is the lowest we've ever seen. In a normal, healthy market, we're looking at four to six months worth of homes for sale. We're at 0.8 months. That's crazy.
Now, what is that doing? When you have a massive shortage of supply of homes for sale, that is causing the time it takes for a home to sell to decrease because there's not a lot of choices for buyers. So buyers are just taking whatever the heck they can get right now. And the media is not reporting it a whole lot yet, but any time you have a shortage of supply, then that's going to drive prices up, especially as we continue to see record low interest rates.
Thinking of buying a home in San Diego?
So if you're reading this, you're probably wondering, "Well, hey Kyle. I'm thinking about buying a home. What does this mean to me?" What this means to you is that prices are going to continue to go up. A lot of times everybody's thinking, "Oh, I missed the boat and it's too late."
There is no indication that I see out there today that is going to slow price appreciation. The majority of the big boys out there, the economists are all predicting numbers anywhere from five to 10% next year. I fall into that same bucket. I would love to see us hit somewhere in that six to 8% range. That's a very healthy number for us to hit as far as appreciation goes. So something around a half percent a month. I think that is a conservative number. I think we could, with inventory as low as it is, I could see us hitting 10 to 12%. But in a perfect world, we get about six to 8% appreciation. Well, you got to decide where do you want to be next year? Do you want to buy a home and take advantage of six to 8% appreciation, or do you want to rent a home and be the victim of six to 8% increase in your rent? Because I promise you your rent's going up in the next 12 months. So you decide. Do you want to take advantage of price appreciation or rent increase? Your choice. Pick your poison. I know where I want to be in that regard.
Thinking of selling your home in San Diego?
Now, if you're on the other side and you're thinking about selling your home, what does this mean for you? Well, what it means is that you got to decide. If you were thinking about selling your home and going and renting right now horrible decision. Like I just said, prices are going to go up, rents are going to go up. So why do you want to sell when you know prices are going to go up to rent something where you know rent's going to go up? That's silly.
So the scenario where it makes a lot of sense right now, if you're selling, you're moving out of state, more power to you. Our family, we just bought a house out in Nashville, an amazing place. So if you're thinking about selling, moving out of state, maybe you want to go to a different political climate, or a lower state tax, or whatever your reason is, we can help you cash in on your property here. And we can help you and connect you with one of our partner agents in whatever market it is that you're going to.
The other scenario that makes sense is to move up right now. What we are seeing is that if you're looking to sell your home here, it's going to be a bidding war, but the lower the price point, the bigger the bidding war. So if you're selling your smaller home and moving up to that larger home, there's going to be a lot more activity and competition for your smaller home. A little bit less on that home that you're going to buy. So good scenario. Sell where everybody is at, and go to where it's not so competitive. You can get a little bit better deal as you move up in price point. So still some good opportunity out there.
So that's where we're at in the market today. It's a little bit crazy, but keep in mind we're comparing to 2020, a little bit of a fluky year, right? So it's going to be fun to see how things play out over the holidays. My personal prediction is I think that the market's going to slow down a little bit as we come into the holiday season. So again, if you are thinking about selling, you might want to get that home on the market before the holidays hit. And if you're thinking about buying, if you're not in a rush, maybe you hang tight a little bit for another month or two. Wait for that slowdown to happen. I'm Kyle Whissel with Whissel Realty Group. If you're looking to buy, or sell, or invest here in San Diego, give us a call at the number down below. Thanks so much for watching.
