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There are concerns that lower pricing will cause recent home buyers to be underwater – and potentially create another bubble to pop.  A factor to consider when assessing the current market conditions is how quickly the affluent buyers have taken over the marketplace between La Jolla and Carlsbad:

NSDCC Annual Detached-Home Sales

Price Range
2017
2018
2019
2020
2021
2022
Under $1M
1,040
706
667
543
120
20
$1M-$2M
1,475
1,505
1,552
1,784
1,621
684
$2M-$3M
384
383
405
518
766
588
Over $3M
232
236
244
385
724
607
Totals
3,131
2,830
2,868
3,230
3,231
1,899

We’re not done with 2022 but there will only be another 80-100 sales to add to this year’s total.

Two thoughts:

  1. The recent buyers had to qualify for financing (if any), and with virtually all of them paying over $1,000,000, they are probably flush and not many will get spooked into selling.
  2. When only the rich can participate, we won’t be having as many sales – with hardly any opportunities for the regular folks who hope to buy under $1,000,000.

Yes, if pricing keep coming down, there will be more sales in the lower-priced categories. But how many more under $1,000,000 next year? Forty? 80? It’s very unlikely that we will get back to the 2021 number, let alone have hundreds of homes selling under $1,000,000.

Not only will the inventory be lower, but the closed sales will probably decline next year too.

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