What is going on in the San Diego Real Estate market in May of 2022? San Diego Realtor Kyle Whissel goes over the real estate market numbers and stats for May 2022. He does a deep dive into the number of new listings, days pending, inventory, and days on market. He then wraps up by talking about the current interest rates and how you can take advantage of less competition in the market.
Market Update May 2022
What's going on in the San Diego Real Estate Market in May of 2022? I'm Kyle Whissel with Whissel Realty Group, and I'm going to break down everything you need to know when it comes to buying or selling real estate today. I'm excited about this episode because I feel like, for the last two years, I've been a broken record saying the same thing over and over and over again, and we finally got a little shake-up in the real estate market, which I know, shake-up and change makes a lot of people uncomfortable, but when other people are uncomfortable, it creates a lot of opportunity at the same time.
So, let's dive into it. If you've never watched our videos before, we always like to focus on the leading indicators, not the lagging indicators that the media talks about, which they're always talking about closed sales, how many homes closed, and the average sales price; those are all lagging indicators that are usually three to five months behind what’s happening now, depending on what source you're hearing it from. Instead, we want to focus on the leading indicators and tell you what's been happening in the market over the last 30 days.
Let's dive in. The first thing we like to look at is the number of new listings that have come onto the market for sale. This is continuing to stay down. We're down 18.4%. There are just fewer people selling their homes today than there were at the same time a year ago. And when we get to the end of the video when we talk about mortgage rates, I'll kind of tie this all together for you. So, next thing is, we've seen the number of homes going pending, or going under contract is down about 18.8%. So, both are down 18-ish percent. Now, you might say, "Oh my gosh, spending is down. Does that mean the market's crashing?" No, just means there are no homes for buyers to buy.
If there are a lot fewer homes coming on the market for sale, you can only have so many homes go pending. So, whenever the new inventory is down, it's more logical that your pendings are going to go down as well because there are just no homes for buyers to purchase or to put under contract.
Another thing we like to look at is days on market. How long is it taking for a home from the day it goes on the market to going under contractor to going pending? That's down about 10%. We're running at about 18 days right now. And then, the last number we like to look at is the supply or the number of homes for sale. That's down about 20% from the same time a year ago.
So, kind of natural, right? Pending sales down 18.8%; supply down 20%. Those numbers kind of line up, right? If you have fewer homes for sale, the supply is down. You're naturally going to have less that go pending. So, those are all kinds of what we would expect and what we've been seeing in the market for a while now, but where the big change is in the market is rates. The mortgage interest rates are up. No joke, they're up about 50%, not from last year, but from last month.
We were seeing rates in March and in early April in the 3% range, but we are now seeing rates in the 5% range here in May. I've even seen as high as 5.5%. If you're buying an investment property, you're in the 6% range at this point. So, we finally got a little shake-up. shake-ups can be scary. Well, guess what happens. When people get scared, that creates an opportunity for you. So, what we've seen happen is the bottom third of buyers have gotten flushed out. A lot of buyers who were just barely in a position to be able to buy were really maxed out on what they could afford in relation to what you could get for the dollar.
Those buyers that were being really picky and didn't jump on the opportunity when the rates were in the threes, they're gone. They can no longer afford to buy what they were able to buy just a couple of months ago. So, you've seen a lot of buyers get washed out of the market. So, what that has done is, for the buyers that are still in the market, that's created opportunity because you have less competition today. So, if you are a buyer who's still in the game, now you can go and buy a home. And now, what we're starting to see is a lot of homes are no longer going for 10, 20% above what they're listed for, we're seeing homes selling for what they're listed for. So, now you see that home that's listed for a million dollars, where two months ago, you'd feel weird writing an offer for a million dollars.
You'd be like, "Oh, well that doesn't even have a chance if I write at list price." Now, that million-dollar offer has a really good chance of getting accepted. So, that's a really good opportunity.
Now you can come in, and if you see a home that's been sitting on the market two, three, or four months, or two, three, or four weeks I should say, that's going to create an opportunity for you to come in at list price, potentially even below, which sounds a little bit crazy, right? But what's happening psychologically for a lot of sellers right now is they saw all their friends sell their homes in a week or two, and now their home doesn't sell after two weeks, they start to panic and now they open themselves up to taking that lower offer. So, it's creating some opportunities for those of you that are looking to buy. And now, yes, it's going to cost you a little bit more money, right? Rates are in the fives right now. So, you got to be willing to take that rate in the fives, so you're going to have a little bit higher payment.
ARM
Or what we've been having a lot of our clients do is get into an adjustable rate mortgage. They say things like, "Oh my gosh, scary adjustable. That's what caused the foreclosures." No, adjustable didn't cause foreclosures. Negatively amortized loans are what caused foreclosures, where you were able to buy a home that was worth it. There was a payment significantly higher than you could afford, but you didn't have to make that higher payment; they let you make a lower payment. But what happened is every time you made a payment, the loan balance went up on your loan. You were actually paying money every month and increasing how much you owed every month. It was a horrible thing, and that's a big part of what caused foreclosures. The other thing was that anybody. I bought a home when I was scooping popcorn at a movie theater for half a million dollars. That should have never happened. That's what caused the foreclosure crisis. That stuff, that's not happening again. It's not adjustable-rate mortgages that caused it, it's the negatively amortized loans, and it's the fact they gave a kid at 20 years old a half million dollar loan, scooping popcorn. That's what caused the foreclosures. Adjustables are great. I have an adjustable on my own personal residence. And so, here's what's great with adjustable is, we're seeing rates right now on adjustable in the 2 to 3% range; 2 to 3%.
So, most buyers don't even know these adjustable-rate mortgages exist, or they know they exist but they're so scared of them that they don't even take the time to learn about them. And they're saying, "Well I can't buy any more rates around the five, so I'm out." Well, the smart buyers, the ones that are working with our team at Whissel Realty Group, we're locking our clients in.
I locked my own personal residence in at 2%, and we can lock you in on a rate like that as well. So, here's what's great for you that's still in the game is, now you can come in you can buy a home, you don't have to overpay for it, and you can get a rate in the 2% to 3% range because some of the credit unions right now are seeing the opportunity to come in and earn some business by offering these adjustable-rate mortgages.
Now, if you're a seller, what should you do? Well, you got to make a decision here, right? We have been on a really good run now for over 10 years. We're coming up on about 12, 13 years into a good run. I don't know if we're at the top, I don't know if we're right before the top, we're just past the top, but we're somewhere near the top of a market. A wise man told me if you can sell near a top, you're doing really well. So, I don't know where the market's going to go. I cannot predict the future, because rates are changing faster than they've ever changed in history. I don't know how that's going to play out over time, but what I know is there's still a good amount of buyers coming to the table, paying great prices for a home.
And if you want to cash in on all that equity that you've built over the years, and have a little bit of degree of certainty, and not worry about where the market's going to go in the future; whether we go into recession, rates go to 6% or 7%. I don't know where it's going to go, but it could be a really good time if you want to eliminate any of that risk, and you want to cash in to know exactly where the market is today. Sellers are still getting amazing prices, and there are still plenty of buyers that are buying.
This could be a really good chance for you to cash in on all that equity that you built. So, whether you want to take advantage of one of these adjustable rate mortgages, and beat your competition and only pay the list price now, or you want to sell your home and rule out the risk of where the market's going to head in the future, give us a call, shoot us a text at the number down below. That'll connect you with my team, where we can learn more about you, and your goals, and put a plan in place to help you accomplish them.
