San Diego Real Estate Market Update June 2012

Historically low inventory and very high demand are edging San Diego’s real estate market off the bottom.  This could very well be the beginning of a very gradual upswing in San Diego’s marketplace.  This spring most local real estate agents have noticed an increase in demand benchmarked by multiple offers.  Personally, since January I have not written an offer on a property, nor listed a property, that did not have multiple offers; sometimes as many as 30 or more on one home.  Furthermore, most contingent short sales in the MLS, also have gained an offer or two behind them as agents struggle to find their clients a home.  (Contingent listings are more often than not, short sales with accepted offers pending lender approval.)

For the most part, much of what is driving multiple offers is an abnormally low inventory in San Diego’s real estate market.  Some areas are down as much as 60% from last year!  Investors create a huge demand on the lower end of the market, both flipping and holding onto these properties.  Yet repeat and as well as first time home owners also compete for a piece of the San Diego pie.

Many experts cite the lack of new home building, coupled with banks trepidation to foreclose on homes, as what is keeping homes off the open market.   Secondly, many existing home owners who are not in financial crisis, despite the fact that they maybe underwater, are not choosing to sell their homes for obvious reasons.   These two facts alone, I predict will keep the housing inventory low in San Diego for months to come.

However, the same factors that depressed our San Diego Real Estate market just a few years back continue to lurk.  Our housing market will not truly recover until job growth rebounds and our economy stabilizes.  I would also point out that election years tend to be good years for the economy.  The real “tell tell” will be where we are a year from now.  However, as one client once pointed out to me, “Tami, we won’t know where the bottom is until we have started to climb out”.   Based on his careful and simple observation, this could very well be the moment just past the bottom.

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