San Diego Real Estate Market Update – March 2022

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Monthly Indicators

The U.S. real estate market remains hot ahead of the spring selling season, with existing home sales up 6.7% as of last measure, according to the National Association of REALTORS®. Experts attribute the growth in sales to an uptick in mortgage interest rates, as buyers rushed to lock down their home purchases before rates move higher. Mortgage rates have increased almost a full percentage point since December, with the average 30-year fixed- rate mortgage briefly exceeding 4% in February, the highest level since May 2019.

Closed Sales decreased 11.1 percent for Detached homes and 14.6 percent for Attached homes. Pending Sales decreased 5.6 percent for Detached homes and 12.1 percent for Attached homes. Inventory decreased 42.0 percent for Detached homes and 51.2 percent for Attached homes.

The Median Sales Price was up 18.1 percent to $915,000 for Detached homes and 21.5 percent to $625,000 for Attached homes. Days on Market decreased 14.8 percent for Detached homes and 34.5 percent for Attached homes. Supply decreased 40.0 percent for Detached homes and 50.0 percent for Attached homes.

Inventory was at an all-time low of 860,000 as February began, down 17% from a year ago and equivalent to 1.6 months supply. According to Lawrence Yun, Chief Economist at the National Association of REALTORS®, much of the current housing supply is concentrated at the upper end of the market, where inventory is increasing, while homes priced at the lower end of the market are quickly disappearing, leaving many first-time buyers behind. The shortage of homes is boosting demand even further, and with bidding wars common in many markets, it’s no surprise sales prices continue to soar.

Housing Supply

With a shortage of existing homes for sale, many prospective buyers are turning to new construction for their next home purchase. But with rising construction costs, many buyers are finding they can’t afford to purchase a new home. Nearly 7 out of 10 U.S. households can’t afford a new median-priced home, according to data recently released by the National Association of Home Builders (NAHB), which found that 69% of U.S. households lack the income to qualify for a mortgage of $412,506 using standard underwriting criteria. For the 12-month period spanning March 2021 through February 2022, Pending Sales in the San Diego were up 2.9 percent overall. The price range with the largest gain in sales was the $5,000,001 and Above range, where they increased 87.5 percent.

The overall Median Sales Price was up 17.2 percent to $750,000. The property type with the largest price gain was the Condos – Townhomes segment, where prices increased 19.1 percent to $559,950. The price range that tended to sell the quickest was the $750,001 to $1,000,000 range at 18 days; the price range that tended to sell the slowest was the $5,000,001 and Above range at 82 days.

Market-wide, inventory levels were down 45.4 percent. The property type with the smallest decline was the Single-Family Homes segment, where they decreased 42.0 percent. That amounts to 0.6 months supply for Single-Family homes and 0.5 months supply for Condos.