Our San Diego market started off slowly during the first half of 2019, but better days are ahead.
How can we sum up the first half of 2019 for our San Diego market? What’s in store for the second half?
It’s pretty easy to sum up the first half of the year. In a word, it was slow—slower than we’re used to, but, fortunately, that didn’t impact prices. Prices recovered nicely from the slump we saw at the end of 2018. At the end of June, prices for attached and detached homes were 4% higher than they were at this time last year.
The volume of sales, though, is down a bit compared to last year, with detached homes dropping 4% and attached homes dropping 9%. Interestingly, the number of homes for sale is up more in the attached market, and I think this is strictly because interest rates are higher.
Interest rates affect the bottom of the market more than the top because there are more cash buyers at the top. With higher interest rates, we’re seeing fewer sales of attached homes, but more inventory.
If we break things down in terms of the coastal market versus the inland market, the coastal market is a little bit weaker. Given that homes are priced higher and the economy is a little bit slower, we’re seeing more resistance. In the inland market, meanwhile, prices are rising quicker and inventory is tighter.
As for the rest of 2019 and into the fourth quarter of the fiscal year, I think interest rates will be very important. The Federal Reserve recently announced that they’d be softening interest rates, and rates jumped immediately afterward because of all the money moving out of bonds and into the stock market.
In the long term, though, as the federal funds rate is brought down, mortgage rates will have to follow because they’ll have to compete with the Fed and treasury bills for investors’ money. So, keep an eye out for falling mortgage rates.
This is good news for homeowners looking to upsize because, as rates fall, they’ll have more buying power. It’s also good news for the market in general because I think we’ll see an increase in home values.
In summary, the market’s been slow lately, but better days are ahead.
If you have any questions about our market or you’re thinking of buying or selling a home soon, don’t hesitate to reach out to me. I’d love to help you.