What has changed in our San Diego area market since last year, and how did these changes come about? Let’s find out.
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Each year, real estate trends ebb and flow. This causes what some call the “heartbeat of the market.”
Yet while seasonal cycles take place over the course of a single given year, economic shifts take much longer—spanning the course of several years at a time.
Another key difference is that economic shifts, which occur when supply and demand move out of balance, are less predictable than seasonal cycles.
In general, there are three different types of market that will manifest as a result of such shifts: a seller’s market, a buyer’s market, and a balanced market.
A seller’s market, as the name implies, favors those looking to list. The market reaches this state when there are less than four months of available inventory. Conversely, a buyer’s market is one where increased supply (more than six months’ worth of available inventory) puts homebuyers in a position of greater leverage.
“Affordability, demand, and buyer perception are the common thread between the factors that cause economic shifts.”
Finally, a balanced market, wherein there is between four and six months of available inventory, is the middle ground between these two types.
With all of this in mind, you may be wondering what causes an economic shift to begin with. There are actually a number of factors at play. While politics and currency exchange rates will contribute to economic shifts, interest rates and inflation help shape conditions on a national level And on a more local level, factors like an area’s average household income and the state of the job market will also contribute to shifts.
Ultimately, affordability, demand, and buyer perception are the common thread between all of the previously mentioned factors.
Now that we’ve covered why shifts occur, let’s take a look at the most recent statistics from our San Diego area market.
As of this September, the amount of available inventory rose 26.2% from this same time last year. The number of new listings also increased year over year, moving 11.3% from 3,795 new listings in September of 2017 to 4,224 new listings last month. The number of homes that went under contract this September, meanwhile, dropped 8.4% year over year. As a result of this last statistic, the average month’s supply of inventory saw a year-over-year increase of 31.8%, leaving us with just under three months’ worth of listings.
Finally, in continuing with recent trends, interest rates and the median sales price both increased this September, as well—going up 0.89% and 6.6%, respectively.
If you’d like to talk about whether it’s still a good time for you to buy or sell in San Diego, have any other questions, or would like more information, feel free to give us a call or send us an email. We look forward to hearing from you soon.