Buyers are competing with multiple offers on homes in a market with low interest rates, and are struggling with low inventory and little new construction, local experts said at a roundtable discussion hosted by the San Diego Association of Realtors.
“We hit a brand new 30-year low,” said Karen Bates of Military Home Programs. “Buyers are being cautious about giving their information today. But, with the time on the market and with the inventory today, I would strongly encourage buyers to get solid preapprovals and be ready to jump, because if they see a property and they wait even 24 hours to send their information in, then they’re going to have trouble being competitive at all.”
Six months of inventory is typical for a traditional market, said Alan Nevin, principal at The London Group. In San Diego County, inventory is down to less than 2 months in some areas — south of Highway 94 there is 1.3 months of inventory. The average days on the market is about 60 to 70 days in a more normal market, he said, and San Diego County is down to about 49 days on the market.
“It’s a tough market to buy a property in; it’s tough to find a good property when you cordon down the issues,” said Leonard Baron of LPB Services, LLC. “For buyers who want to buy real estate: Get preapproved, get your funds ready and when you find a property you really want you better chase it like crazy. That’s going to be your best chance to get a great property.”
The housing inventory is being further limited by little new construction. When the market was “hot,” Nevin said there were about 10,000 to 15,000 permits pulled for new construction. This year, there will be about 6,000 permits for single family and multi-family units combined, said Kelly Cunningham, economist and senior fellow at the National University System Institute for Policy Research.
Robert Vallera of Voit Real Estate Services said he expects to see a “significant” increase in multifamily construction going forward, but not enough to meet the growing demand for rental housing.
“When I look at single family, what I see basically on new construction is that most of it is in North County and homes selling for $600,000,” said Nevin.
Homes under $600,000 in all areas are seeing multiple offers, said Donna Sanfilippo, president of SDAR, because of the limited inventory.
Homes in the upper price range have more inventory, said John Altman of JT Altman & Associates.
“Right now, we’re in the very most unique move-up market,” said Altman. “The market below the $700,000 price range down there is very hot because of the lack of inventory. But if you go over $700,000, we have over six months of supply there. So you’re in a seller’s market here, and a buyer’s market there.”
The number of cash transactions was at almost 30 percent in the second quarter, said Altman, up from 25 percent in 2011.
“The number of cash transactions has increased this year even though prices are going up. We’re seeing less inventory at low, low prices but there’s a lot more competition there,” said Altman.
Vallera said he once though population drove demand for housing, but quickly discovered that employment drives demand for housing. San Diego added more than 30,000 jobs in the past year, said Cunningham, which he said is “pretty strong.”
“The number of people employed in July was the highest ever in San Diego’s history,” said Cunningham.