Buyer fatigue has hit San Diego’s real estate market as some people are taking a break after making offers on several homes to no avail, according to several real estate agents.
“In my opinion, I feel the buyers are feeling beat up and a little tired,” said Dawn Suprenant, with Windermere Homes & Estates. “It’s still crazy. It’s not as crazy as the spring. I think they feel like, ‘I’ve tried everything. I’m going to take a break,’” Suprenant said. “There’s only so many times you can make an offer and be rejected and want to come back.”
Julia Maxwell of Berkshire Hathaway HomeServices California Properties said that for most buyers, “it’s a very frustrating and emotionally draining market.”
“Currently we’re seeing a very subtle, I can’t emphasize how subtle, softening in the upper range prices where we were seeing market times of two days, three days or less, we’re seeing slightly longer market times,” Maxwell said.
Even so, the market remains hot, with multiple offers still commonplace as prices continue to rise, interest rates remain near record lows and buyers far outnumber sellers with no letup seen anytime soon. Suprenant said she recently sold a Rancho Penasquitos home for $101,000 over the asking price. She said it’s become more common for buyers to pay more than list price.
Carlos Gutierrez of eXp Realty of California said the market is shifting ever-so-slightly, but that it remains very much a seller’s market. “We’re starting to see inventory creep up, longer days on market,” Gutierrez said, adding that there are fewer “hyper bidding wars happening.”
“We still have bidding wars but I don’t see them happening as much,” Gutierrez said.
Nancy Layne, president of North San Diego County Realtors, said she’s noticed a letup in the market, like Suprenant, attributing it to buyer fatigue. “We’re finally seeing more stuff come on the market. It’s getting a little more competitive, Layne said. “I think it’s flattening out.”
Dina Brannan, vice president of operations for Century21 Award, said the market “has kind of lost its panic mode.” “Things are not flying off like hotcakes. They’re still going fast, but they’re not this crazy where things are selling before they even hit the market,” Brannan said.
Melissa Goldstein Tucci of Coldwell Banker West said that the overall market is “the strongest it’s ever been,” although she said the number of offers being made on a particular house has dropped a little since mid-June. “The values are still skyrocketing and it’s still a great time to buy because I don’t personally see anything changing anytime soon,” Tucci said. “I see the market remaining strong.”
Wendy Purvey, chief operating officer of Pacific Sotheby’s International Realty, said it would be wrong to say the market was softening. “The frenzy has tailed off. I would not say it has died down. We still have frustrated buyers that can’t get what they want,” Purvey said. “There’s no way that there’s a softening in the market. What’s happening is a tiny correction and that correction is way, way needed in a healthy market. The price and values can’t keep going up at this rate.”
Sean Caddell of Pacific Sotheby’s International Realty, said he’s seen more people paying cash instead of having a mortgage, and they’re willing to pay more than the seller’s asking and they’re eliminating contingencies, “buyer investigations, everything.”
“We’ve had almost every property we sold recently, the buyers have removed their appraisal contingency, whether it’s financed or cash,” Caddell said. “I have not seen it like this before where people are so anxious and excited to get a property.”
According to Reports on Housing, an agency that tracks housing in San Diego and Orange counties, the inventory of homes on the San Diego County market was up by 11% in mid-July, to 3,059 listings but that still was a near record low and compared to 4,577 homes on the market at the same time last year.
The inventory in 2006 – a year before the Great Recession – was 18,000 homes on the market, reaching 20,000 in 2008. Meanwhile, housing prices appreciated at a rate of 14.6%, the highest rate of appreciation since 1988, according to Reports on Housing.
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The prognosticators keep prognosticating, but their prognostications don’t happen. Home price appreciation shows no sign of slowing down.
CoreLogic says home prices nationwide, including distressed sales, increased in June by 17.2 percent on an annual basis. In May the annual change was 15.4 percent, the greatest increase since 2005. For June’s equal, one must look back to 1979.
We risk running out of years.
Frank Martell, CoreLogic’s president and CEO says, “Home prices have been rising in the mid-single digits for some years now. The recent surge to double-digit price jumps reflect the convergence of exceptional demand and persistent low supply. With plenty of cash on the sidelines, along with very low mortgage rates, prices are heading up and affordability will become a more acute issue for the foreseeable future.”
Seventy-three percent of consumers say that the pandemic and the accompanying stay-at-home orders helped them save money. These cash reserves and low mortgage rates have kept homeownership in reach despite affordability challenges.
Prices increased on an annual basis in every state. Those with the highest rates of appreciation were Idaho (34.2 percent), Arizona (26.1 percent), and Montana (24.3 percent). While home price changes on the local level vary, June gains in all top 10 metros surpassed their 2020 levels.
There are recent indications that prices are beginning to stabilize. The national increase from May to June was 2.3 percent, the same growth as was seen from April to May.
CoreLogic’s forecast is for its Home Price Index to gain 0.7 percent from June to July 2021 and grow on by 3.2 percent from June 2021 to June 2022. The company says, “While affordability challenges intensify, low mortgage rates, rising savings and an improving labor market are helping to keep homeownership within reach for many prospective buyers. However, CoreLogic projects home price gains may slow over the next 12 months as demand moderates and for-sale inventory rises.”
We will see.
getting people to go back to the office is like herding cats……and those cats are getting ready to stampede.
full remote/hybrid work will be with us for quite some time. My wife’s company made it clear recently to their employees that leadership is not even talking about …..talking about……how to return to the offices.
And….if there are no major issues with kids returning to school full time combined with remote work? yeah, forget it……commercial real estate will be looking for gov’t bailouts.
so yeah, I see demand from buyers for more space to remain quite steady for a long long time.