Market Update - April 2023
Market Action Index - April 2023
San Diego home values are down year over year. According to the Union Tribune, “San Diego metropolitan area saw its annual price drop 1.4 percent in January, said the S&P Case-Shiller Indices. That is a substantial difference from the 30 percent rise in March, and the first time America’s Finest City had posted a negative number since June 2012.”
Is the housing market on the the edge? Will prices continue to decline? Are we headed for a crash? If you’ve been reading for awhile, you know I’ve never believed there’s going to be a crash and I don’t now.
Yes we’ve erased significant gains in the last year, but ultimately home prices have risen so much in the last few years that most of us should be in good shape. The real pain point has more to do with interest rates than anything, but I’ll get to that in a second. As far as home prices go, median home prices are up significantly from last month. We’ve started to really creep back into a seller’s market again primarily because of inventory. And why don’t we have any inventory? Mostly because any potential seller doesn’t want to trade their 2 or 3% interest rate for today’s 6+%. In fact, according to Goldman Sachs, “99% of borrowers have a mortgage rate lower than the current market rate.”
“99% of borrowers have a mortgage rate lower than the current market rate.”
Market Profile - April 2023
Read that again: 99%! First of all, who’s in that 1%?? I have to assume it’s all brand new homeowners for whom selling right now wouldn’t make any financial sense in any type of market. So it’s safe to say that every potential seller would end up with a higher rate than the one they have now. That’s a huge barrier. While the dollars are substantial, it’s the psychological part that keeps most sellers static. Many can’t get over ‘giving’ more money away by increasing their interest rate. And I have to say… I get it!
There’s only 3 seller types right now. 1. Cash out of investment properties 2. Moving out of state 3. Unchangeable life circumstances that require a sale. With the lack of inventory, we’ve seen tons of market action above list price again. It’s happening folks, and believe it or not it’s getting really competitive even with interest rates the way they are.
Has the market hit its bottom point for now? It looks that way for now. I think the only major factor that could cause a slide is if the jobs reports continue to be negative. The average seller (as discussed) has no reason to sell unless (#3 above) unchangeable life circumstance (i.e. losing a job and not being able to afford their mortgage, etc).
In addition, there seems to be a fair amount of concern about the economy. When fears about the economy rise, historically, people don’t make big life moves or changes. They stay put and batten down the hatches.
I hosted an open house over the weekend in a highly desirable home. We had tons of hungry active buyers, but it seemed like no one could quite wrap their heads around the rates and what that equates to in the monthly mortgage payment. So what gives? Most experts expect rates to peak and slowly drop as the year ends.
“San Diego metropolitan area saw its annual price drop 1.4 percent in January. That is a substantial difference from the 30% rise in March, and the first time America’s Finest City had posted a negative number since June 2012.”
I leave you with this… it’s A LOT. I get it. It’s completely and utterly overwhelming, BUT I promise you that the easiest path to understanding is to give me a call. Your situation is different than everyone else’s and for obvious reasons I have to write this update very generally. All that being said, if you’re considering buying or selling, please give me a call and let’s talk about if it makes sense to do it sooner rather than later.
Cheers to spring and sunshine! Have an epic April!
P.S. I live on referrals (and will love you forever) if you send someone my way. It’s among the greatest compliments I can receive. I will treat them like family. Thank you in advance!
Brendan