Whether you’re analyzing the real estate market nationally or closer to home here in San Diego, there’s one trend you can always count on—the market is constantly in flux. Another common thread is seeing how the media responds to an ever-changing market. In many cases, what gets printed in newspapers is not always the same as what’s happening on the ground.
2023 was a landmark year in real estate for many reasons, while the Federal Reserve began its rate-hiking campaign to battle inflation, homebuyers dealt with inventory shortages and affordability issues. Industry experts and the average homeowner alike anticipated what 2024 would bring.
The first quarter of the year saw a shift in the narrative. For example, while most news sites were reporting on Americans increasingly forgoing buying a home in favor of renting, census data from January proved the exact opposite. Homeownership is rising and the number of ‘home-owning households’ increased by 10 million since 2015.
Similarly, market results for the first few months of the year paint a slightly different picture than what you might see on the average news site. The results are fairly positive and experts see things only improving as inflation decelerates and we get closer to interest rate cuts.
As a whole, we are seeing year-over-year appreciation this quarter. As we progress through the Spring Market, traditionally the busiest time in real estate, most San Diego submarkets saw an uptick in sales and prices, as well as increases in pending sales and new listings toward the end of the quarter.
While we can’t ignore the affordability struggle that many Americans are facing, recent data from this quarter suggests that the percentage of cash buyers is at an all-time high. The US now also has a record 550 ‘Million Dollar Cities,’ where the typical home is valued at $1 million or more. Furthermore, it’s important to remember that the current market is far from the volatile conditions seen in the 1980s. In fact, the majority of borrowers today have mortgages below 6%, which is still lower than other points in history.
First-time buyers have also re-entered the market, reaching pre-pandemic levels at the end of last year. Millennials are famous for achieving milestones later in life, and as the elder Millennials begin to have kids and advance in their careers, they are looking to upsize and upgrade their homes. Concurrently, Baby Boomers are aging and seeking a different type of home to suit their needs, resulting in less competition for Millennials and giving a different demographic of buyer the chance to dominate the market and grow personal wealth through real estate.
Last year, San Diego was the fifth most expensive metropolitan area in the US. In March, the S&P Case- Schiller Index reported that San Diego had the biggest increase in home prices in the nation with year-over-year growth of 11.2%. This, coupled with a low statewide move-out rate of about 1% shows persisting value and demand for the area. Simply put—people love living here!
As we enter the second quarter of 2024, we can expect continued market appreciation with more new listings, rising prices, and fewer days on the market. Conditions are accelerating, making now an ideal time to make your move.
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