Welcome to the latest scoop from your local San Diego real estate experts, Team Kolker Wendlandt! The new year has brought us resolutions, and... some truly unexpected twists in the housing market.
Lets dive into the latest trends and what they mean for buyers and sellers alike. Spoiler alert: things are getting interesting!
The Market Takes an Unexpected Turn
Typically, January brings a surge of activity. Inventory rises, demand kicks up, and the Expected Market Time (the time it takes to sell all active listings at the current pace) starts to drop. But this year? Not so much. Over the past two weeks, the Expected Market Time actually increased on average, from 90 to 99 days. Adding an extra week to the selling process—and it’s not what we’re used to seeing this time of year.
Why the Slowdown? Let’s Break It Down
The Expected Market Time is influenced by two key factors: supply (the number of homes for sale) and demand (the number of homes going into escrow). Here’s what’s happening:
Inventory Surge:
- The number of homes on the market jumped from 3,335 to 3,770 in just two weeks—a 13% increase.
- This is the largest inventory rise at the start of the year since 2012.
- More homeowners are listing their properties as the "hunkering down" trend (staying put due to low mortgage rates) begins to fade.
Demand Dips:
- While demand did increase slightly (up 3% to 1,143 pending sales), it’s not enough to keep up with the rising inventory.
- Higher mortgage rates (hovering above 7%) are keeping many buyers on the sidelines.
Luxury Market: Slowing Down but Still Shining
The luxury market (homes priced above $2 million) is feeling the slowdown, too:
- Inventory climbed 11% to 665 homes.
- Demand dipped slightly, and the Expected Market Time for luxury homes increased to 200 days.
- But don’t worry, this segment of the market tends to heat up as we move into spring.
What Does This Mean for YOU?
- For Buyers: The rising inventory offers more options, but affordability challenges persist. Stay prepared for negotiation opportunities.
- For Sellers: Pricing realistically and emphasizing value is critical in this slower market. Expect longer selling timelines.
- For Investors: With luxury properties softening, there may be long-term investment opportunities.
- For Rental Owners: Elevated rates make renting more appealing for some buyers, potentially strengthening demand in the rental market.
What’s Next for San Diego Real Estate?
Here’s what we’re watching:
More inventory: Expect a steady flow of new listings as more homeowners test the waters.
Demand growth: Historically, demand picks up as we head into February and March.
Mortgage rates: The Federal Reserve’s upcoming decisions will play a huge role in shaping the market. Keep an eye on rate trends!
The Bottom Line
The San Diego housing market is off to an unusual start in 2025, but that doesn’t mean it’s all doom and gloom. Whether you’re buying, selling, or just curious, we’re here to help you navigate the twists and turns with confidence.
Got questions? Ready to make your move? Reach out today. Let’s turn these market quirks into opportunities for you!