The real estate market is always changing, and it can be tough to predict what will happen next. In this video, San Diego Realtor Kyle Whissel will take a look at what to expect from the market in December 2022. So whether you're thinking of buying or selling, this video will give you a good idea of what to expect in the near future!
What's going on in the San Diego real estate market here in December of 2022. My name is Kyle Whissel with Whissel Realty Group, and today I want to share my 20 years of experience having focused on the San Diego real estate market selling 4,000 plus homes. And I'm going to tell you what you need to hear about the real estate market. Now, with the media's reporting, they're telling you all kinds of stuff that's not actually true or is not timely because they focus on a lot of the, what we refer to as lagging indicators that aren't going to give you a clear picture on what's happening in the market.
So I want to focus on what's happening today, the most up-to-date info possible, so you can make the right decision for you and for your family. So there's a few things we like to look at that are on the leading indicator side, but I'm actually going to give you a lagging indicator for once. I don't typically do that but we're talking about things that have already sold, which is what the media usually does, and those things tend to be delayed a few months.
But here's what you need to know is the number of homes that closed escrow back in November, that number was down 47%. Like, that's a huge decline from the same time a year ago. And understand what closed in November is stuff that went under contract in September or October. So we don't even know how bad it's going to be for November yet because those numbers won't get reported until probably January or February.
So even if we just go back to September, August, the number of closings down 47% in San Diego, that's a huge, huge decline. So let's talk about what's happening today though, right? The number of homes that have come on the market for sale, that number continues to stay well below where we were a year ago. That number's down about 30% from the same time a year ago. And why are there less homes on the market for sale? Well, a lot of people have interest rates on their current home in the two, three, 4% range. And if you were to sell that home today and move up to a bigger home, you're looking at an interest rate in the fives or sixes today.
So because of this big gap in interest rates, a lot of people are holding off on actually selling their home. The next thing we like to look at is the number of pending homes or the number of homes that have gone under contract. That number's down 49%. So new homes on the market's down 30, pending is down 49%. As a result, there's so many less pendings that we're seeing the number of buyers in the market is kind of going away that's causing supply to come up because there's just not as many people buying. In fact, supply's up 133% from the same time a year ago. Now, when you hear 133%, like oh my gosh, that's a crazy number. But the supply of homes for sale is still under two months, which is historically considered low inventory.
The only reason we're not seeing values jump right now is because of this interest rate situation. Because we've got this interest rates in the fives and sixes right now, a lot of buyers are sitting on the sidelines not taking action. But two months of inventory is low. A balanced market is usually four months. Some people will tell you it's six months. I think that's crap. I think four months is a balanced supply of inventory, but that means we have half the inventory that we would have in a balanced market but we're seeing prices declining right now and it's all because of rates. So what we're really looking for right now is we're looking to see what happens with CPI, or a lot of people refer to that as inflation because inflation drives interest rates.
As inflation goes down, rates go down. When rates go down, buyers come back. When buyers come back, at a certain point, prices go up especially when we don't have enough supply of homes for sale. So that's what we're tracking here at Whissel Realty Group. I believe as we sit here in December, values are still declining. I think we still have some more decline to go but my Econ degree from UCSD tells me that inflation is going to fall substantially over the next six months. And as inflation falls, rates fall. Buyers are going to get back in the game.
I don't think it's going to be long before we start to see things flatten out and ultimately turn back up again. My prediction is we'll probably continue to see a decline in the Q1, flatten out in Q2, and probably start to pick back up again in Q3. So what does that mean to you, right? If you're thinking about buying a home, there's a little window of opportunity right now where you don't have a whole lot of competition. A lot of buyers are sitting on the sidelines waiting for the rates to decrease. When they do, the buyers come back, it gets competitive again.
So if you're willing to take a little bit higher rate today and in understanding that the value might decline a little bit even after you buy it, the benefit right now is that you could pick and choose the home you want in the neighborhood you want with the terms that you want. Because if you ask your friends who bought a home a year ago, they were buying homes site unseen with offers well above the list price. You were having to pay for cash out of pocket because the homes wouldn't appraise. You couldn't have any contingencies.
It was terrible, and people ended up in homes they didn't really want. So the benefit today is that you could get the home you want in the neighborhood you want, terms you want, but you got to understand you're going to take a high rate today and the value's probably going to decline a little bit over the next few months. So if you're okay with that, you get the home you want. Let's keep in mind, we're buying a home because we're going to live in it. We're probably going to raise our family there. We're going to retire there, things along those lines. So, getting the right home is probably the most important thing, right? Who cares if you get a good deal on something if you're in a horrible neighborhood? So, I think there's a good opportunity. Now, hey, if you're not comfortable buying in a market where values are declining, maybe you wait.
Yeah, I'm actually telling you might want to wait, but just understand by waiting, it's going to get busy again. When it does, now you don't have that same liberty. And if you buy it now, you take a high rate. As rates come back down again, there's going to be an opportunity for you to refine in the future. Beautiful part about home ownership, your payment can't go up but it could always go down if you take a lower rate. And if you're thinking about selling, well here's the thing, inventory is very, very low like we said, right? We're still sitting under two months of inventory.
So there's buyers out there, it's just taking a little bit more time to sell right now. You got to be a little bit more flexible right now with terms. You got to be willing to give the buyer some of the terms. It's a little bit more of a buyer's market than a seller's market today. But if you're thinking you're going to be making a move at some point in the future, we just said multiple times, values are still going to decline a little bit. So if you want to sell before the value declines any further, now's a good time. But if you're going to sell and you're going to go rent, just know rent's crazy. Rents are up like 25% from a year ago.
So just make sure if you're going to sell and rent, make sure you know what you're getting yourself into when it comes to rent. At the end of the day, if you're watching this video, you want to sit down, we'll do a free strategy session with you. Figure out is now the time to buy? Is it time to sell or is it time to rent? Happy to sit down, do a free strategy session with you. Give us a call, shoot us a text at the number down below. I'm Kyle Whissel with Whissel Realty Group.
