In this video, San Diego Realtor Jeremy McHone takes a look at the current state of the real estate market and makes some predictions about what it will look like in 2022. Discussing topics such as home prices, interest rates, rental prices, and more. This information can help you make better decisions about your investments in real estate!
What's up everyone? I'm Jeremy McHone with the Whissel Realty Group. I just wanted to shoot a quick video with a market update to discuss what's going on in the market right now, November, 2022. There's a lot of uncertainty in the market right now. A lot of people are wondering what's happened. So I wanted to dig into the numbers, so that we're not speculating on what's happening, we're just talking about the facts. And then we can draw some basic conclusions from those facts. Let's talk about what pricing is doing right now.
'Cause everybody knows that prices are declining. You might have seen some places people still saying prices aren't declining. We're up 4% year over year. Yes, that's true. However, that's year over year. So from last year to this year, prices have gone up 4%, 3% depending on where you look. However, if you look from the peak this year, which was in April, to now, the median home price in San Diego was a million dollars in April. That's for single family homes. Now it's about 880. So that's a 12% decrease from the top. So regardless of what you may hear, prices are currently declining in San Diego County. That's just a fact. If you look at the median price, every month it's gone down since April. So we're in a declining market. There's no debate about it now. Those are just numbers. What's causing that? Well, let's look at, first of all, supply and demand. 'Cause that's what sets pricing, right?
What's interesting is you would think that there's more homes coming on the market, and maybe that's what's causing it. But it's actually not true. New listings right now, for October, the most recent month that we have the data for 'cause now we're in November, new listings are down about 25%. So you may be wondering, well if new listings are down 25% that means inventory should be down. So why are prices going down? Well, let's look at the other side, that's the supply side. Let's look at the demand side. The way we measure demand, the best measure we have of it is looking at pending listings. So that's homes that went under contract.
Last month, pending listings were down about 44%. So while, yes, on the supply side, new listings, there's less homes coming on the market, new listings are down around 25%. On the other side of the equation, on the demand side, pending listings are actually down even more, at 44%. So the problem isn't that there's not enough homes on the market, the problem is there's not enough buyers buying those homes. And when, even if not that many homes are coming on the market, you still don't have enough coming off the market and so inventory still grows. And so when we look at overall supply, supply is up about over 80% from this time last year.
So what that means is, there's a lot more homes on the market for you to choose from if you're a buyer. What that also means is if you're a seller, it's a lot more competitive right now to sell your home than it has been for the last couple years. So even though there's not as many homes coming on the market, because they're not coming off quickly enough, the inventory's still piling up. What does that mean for you? That means if you're a buyer, it's actually a pretty good time to buy a home right now. You've got a lot more choices than you've had over the last couple years.
And a lot of sellers are feeling that pressure, and so you're seeing price reductions. You're seeing them being willing to negotiate with you. We're seeing credits to the buyers. So you can get that home in the neighborhood you want, on the terms you want, and you could probably get it for a good price. The downside right now of that is interest rates. You're going to have to eat that high interest rate right now. Earlier this year, at the beginning of the year, we were seeing interest rates in the the low threes, sometimes even the high twos. Right now they're in the mid to high sixes. And that's after they came down this week. Earlier this month, they were actually in the low sevens. So if you're a buyer, yes, you got to eat that crappy rate. But when rates come down in the future, you can always refinance that. So you can change your rate.
One thing you can't change is your purchase price. So you can lock in a really good price right now, while prices have declined. And then when rates come down as inflation comes down in the future, you can refinance and get a nice low payment. What's causing the new listings to be so low right now? My best guess, is it's also interest rates. If you're a seller and you refinanced recently, in the last couple years, and you have a high 2, low 3% interest rate and you're looking at selling your home and buying another home, you're looking at effectively doubling your interest rate when you sell your home. A lot of homeowners right now that were thinking about selling, decided to hold off 'cause they don't want to sell their home right now at a lower price than they could've got a few months ago and then buy a new home at double the interest rate. So there's a lot of sellers that are holding off on selling because of interest rates also, which is help preventing even more homes from coming on the market. Does that mean that you should hold off on selling your home?
There's not really a right answer to that. It really depends. If you have to move, and you know you're going to have to sell sometime in the next six months or a year, it's probably best just to rip that bandaid off and sell it right now. Are you going to get as much as you could six months ago? Unfortunately, no. However, like I said at the beginning of the video, year over year, prices are up 4%. So that means that that's actually a healthy growth number. So that means if last year if you were thinking, oh, next year I'm going to sell my home and you were told, well you're probably going to sell it for about 4% that it's worth right now. At that time, you'd probably be pretty happy with that number. Now since then, prices went up and then they went back down.
And so now you might seem like it's a disappointment to sell your home at the price it is right now 'cause you're looking at what the prices were in April. But in the long term, if you've been in your home for more than, you know, six months or a year, you probably have pretty good equity. You probably did a really good job. And you're going to sell that home for a lot more than you bought it for. So it's still a win. Now if you don't need to sell your home but you've been thinking about it. Maybe, you know, you might want to move but you're not sure. It probably makes sense to hold off right now on selling your home until prices start to come back up.
'Cause most economists think that interest rates are going to come down next year. And if interest rates come down, most likely that means that we're going to see prices revamp. Right now, I think, if you're a buyer and you're thinking about buying, I think it's a great time. My advice would be to buy now, get a really good price. Get the home you want, in the neighborhood you want. You're probably going to have a few options available. It's not like last year where there was one home in the neighborhood on the market with six offers. Now there's probably six homes in the neighborhood and one of them's getting offers. So it's a much easier market to be purchasing in, and you can be a little bit pickier.
And just eat that crappy rate for now and know that you can always refinance down the road. If you're trying to decide if now's the right time to buy or sell, and you want to sit down and put a game plan together, drop a comment below. Or shoot me a text at 619-971-0791.
