San Diego Realtor Kyle Whissel goes over the real estate market numbers. Doing a deep dive into the new listing, days pending, inventory, and days on market.
San Diego Market Update
What's going on in the San Diego Real Estate Market here in July of 2022? My name is Kyle Whissel with Whissel Realty Group. And today, I get to do a fun update. Now you're probably watching this what the hell is he talking about? Fun?
The market's crazy. Things are changing. Oh my gosh. Yeah, that's fun for me. We actually have some change. For so long now, we've given the same report. Pretty much within two months of COVID first starting the market took off like a rocket ship and we've been given the same report over and over every single time. But things are starting to change now and I'm excited to dive into it today and really help you understand one, what's happened so far, and kind of where I think we're headed moving into the future. So let's dive into it. As always, we like to look primarily at the leading indicators. These are the things that are happening in the market today not the things the media is reporting that are often two, three, or four months behind what's happening in the market today. So with that said, want to dive in.
The first thing we always like to look at is the number of new homes that have come onto the market for sale. And that number is down 12.1%. So there are 12.1% fewer homes that have come on the market in the June time period versus June a year ago. So there's a drop there. There's also a drop in the number of homes that have gone pending, that's actually dropped 38.7%. So both the number of new homes on the market and the number of pending homes on the market have dropped primarily because of interest rates. So if you've been paying any attention to mortgage interest rates, you've seen that those have jumped pretty significantly. In June, we peaked out around six, 6.25%, kind of pulled back a little bit since then into the mid-fives at this point at the time of this recording. And so we've seen a lot of buyers just get out of the game.
You know you got to think if rates go up, usually for every 1% rate go up, that takes about 10% of your purchasing power away. While we were looking at rates in the high twos, and low threes six months ago, now you're looking at rates in the mid-fives, which took out a lot of buyers' purchasing power. 2.5, 3% mortgage rate, which took a lot of buyers’ purchasing power away. So it makes a lot of sense that the number of homes that have gone pending or under contract has dropped 38.7% from the same time a year ago. So what that's done is yes, new homes are down on the market but pending is down substantially more. So what that's done is that's increased the overall supply of homes for sale on the market, that's up 36.4% from the same time a year ago.
And it's taken a little longer for homes to sell now, that's up about 5.6%. A little lower than what I would expect, I think it's going to take a little time, that number I expect to increase more and more. So really what's happening right now is as mortgage rates are rising, you're seeing a lot fewer buyers looking to buy. You know, a lot of people were already at the top of their budget and then mortgage rates increase, which kills your purchasing power. A lot of buyers have gotten out of the market. The good news for those buyers that are still in the market is there's a lot less competition right now. So it's creating a lot of opportunities where six months ago, when you were writing an offer on a home, you were lucky if you even got to go see the home before you wrote the offer, you were having to write an offer sight unseen with virtually no contingencies for things like inspections or appraisals like it was pretty crazy.
We're now seeing sellers more willing to give you a little bit of time to one, come see the home and complete your inspections. Heck if you need some credits to help out with closing costs or there are some repairs needed on the home and you want to credit it in lieu of completing those repairs like we're seeing that get negotiated into deals a lot more today. And we're seeing some sellers who want to just get out of their homes and are willing to take a discounted price right now. There's a lot of what's often referred to as FUD, fear, uncertainty, and doubt. And we're seeing a lot of that in the market right now and that's created some sellers who are very fearful, they're uncertain, they have some doubt about where the market is headed. They just want to get out of their property and they're willing to unload properties at a discount if they can get rid of them quickly. So we're seeing some opportunities come up for those who are looking to buy. One of the things I want to talk about is we normally don't look at these lagging indicators but we have to 'cause there's a big change that's happened and that's on the median sales price of homes that closed in the month of June. Now keep in mind what closed in the month of June probably went under contract in either April or May.
So this data we're looking at, this is the data we don't normally report on 'cause it's a few months delayed but we have to talk about it and the reason is the median home price for single-family homes stayed pretty flat from May to June. There was a slight increase but we actually saw the median price of condos drop from May to June by close to 5%, it was 4.77% to the exact. So we've actually seen prices drop in San Diego. Like yes, the prices are actually dropping in San Diego. Now that was only on condos. The single-family stayed pretty steady but I think that that's the start of something. I don't think that that's isolated to one fluky month with condos. I believe that you're going to see prices pull back a little bit in San Diego in the coming months, especially because a lot of the mortgage rate increases didn't happen until the month of June. And so those people who got wiped out in the month of June were not going to see the effect on sales price for two, three, four months from now. So my personal opinion I think you're going to see a little pullback in pricing in San Diego. So if you're thinking about buying, it's going to create some opportunities for you because you're going to see prices come down a little bit.
You're going to have sellers be a little bit more flexible, willing to give you some inspection periods, potentially give you credits help with closing costs, repairs, things like that. If you're thinking about selling, here's the best advice I could give you. So if you've been thinking about selling in the next one, two, three years, probably should sell now. I would not wait. Now I don't know for sure where the market's going to go, I have done this for 20 years, I have a degree in economics, and sold about 4,000 houses so I have a pretty good grasp on it but even with all that experience, I don't know for sure where the market's going to go and anybody who tells you, they do know for sure, they're just lying. They're taking a guess hoping that they're going to be right. My personal guess, I think you're going to see a little bit of a dip for the rest of 2022. With rates jumping as much as they have, it's inevitable. So I do think you're going to see a little bit of depreciation the rest of the year. Where do we go next year? I don't know. I think we might stabilize a little bit as buyers get adjusted to rates being in the fives or sixes, I think eventually buyers will just accept that's what it is. That could happen and then we could flatten out or maybe even go back up.
Or buyers could reject rates in the five or sixes and we could decline further. So what I would tell you is if you're thinking about whether or not you should sell your home, if you've been thinking about doing it in the next two or three years, I would do it now. I don't know for sure if we're at the peak, right before the peak, or right after the peak but I know we're very close to a peak and a wise man told me if you can buy close to the bottom, then you can sell close to the top, you're doing really, really well because you'll never know where the top was until you're past it and you'll never know where the bottom was until you're past it. So I know we're very close to the top which makes it a great time to sell.
So if you are thinking about selling, if you've been thinking about it, whether you're moving up, moving down here in San Diego, or moving the hell out of California, we got you covered. Give us a call, shoot us a text at the number down below. I'd love to tell you exactly where your new market value is based on this new market that we're in. Give us a call, shoot us a text, I'd love to help you out with that. Kyle Whissel, Whissel Realty Group, thanks for tuning in.
