There is a lot of confusion about our real estate market in the news. When it comes to residential real estate, it’s hyperlocal—down to the specific neighborhood and street. What you hear in the national news isn’t necessarily what’s happening right here in San Diego County.
Last quarter, we spoke of how bank collapses like Silicon Valley Bank hadn’t had the extreme ripple effect we might have expected, and that has remained true. In fact, as other banking and lending giants release their second quarter earnings, it’s clear that Wall Street had a good quarter overall. This, combined with a drastically lower inflation rate of 3% at the end of June–compared to 9% last year–is great news for home buyers and investors as their portfolios continue to restabilize and even grow.
In other news, California has been faced with insurance struggles as two major private homeowner insurance companies–Allstate and State Farm–have stopped issuing new policies. Price hikes, elevated construction costs and wildfire risks are contributing factors, and other companies are working to adjust their business to account for these costs. While current Allstate and State Farm customers will not lose their insurance, this decision has made it more important for all homebuyers entering the market to be proactive when it comes to obtaining insurance.
Inventory shortages continue with only two months supply at the end of the second quarter–a small 5% increase from this time last year. While unemployment has stayed relatively stable nationwide over the last year, San Diego’s unemployment rate has been on the rise over the past quarter. If unemployment continues to rise, we may see this impact buyer demand, inventory and other aspects of the sales cycle.
Current homeowners, many of whom are locked in mortgage rates several percentage points below today’s current rates, are also delaying the decision to sell until market conditions improve. In fact, the US home turnover rate in the first half of 2023 has fallen to the lowest in at least a decade as high mortgage rates compel owners to stay put. About 14 out of every 1,000 US homes changed hands during this period, down from 19 in the same period during 2019. New listings in San Diego County were down almost half (42.7%) from a year ago at the end of the quarter.
As we focus further into North County specifically, we did see a significant rebound from Q4 2022 and even last quarter. The pull between strong demand and tight supply is keeping the market competitive. On average throughout the second quarter, properties in the submarkets we monitor remained on the market for 28 days–right in line with the county average–and 81% of homes sold were on the market for less than a month.
You can read even more about how the North County market performed in Q2 in the following pages, and as always, if you have any questions about your specific market, we’re here to help.
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