A lot has changed in our market in the past year, so stay informed.

We're in 2023, can you believe it? As we enter the new year, I’m going to recap 2022, because as I've mentioned before, the year was quite the roller coaster. Peaks rose even further and then the market started to correct, so I am going to share some of the important highlights.

At the beginning of 2022, we were still in a turbulent environment. Everything was going on and off the market in a matter of days, there were multiple offers, and people were overbidding like crazy. Then, that started to subside as interest rates got too high. After that, price points started to go down, and we are currently in a healthier market.

In addition, buyers are going after lower-priced and/or smaller properties more and more. Therefore, the average price per square foot is increasing. The condo market has been doing better—it appreciated 14% year over year, whereas single-family homes finished the year around 9%.

“We are currently in a healthier market.”

Another thing that changed throughout the year was the number of transactions, which came down quite a bit to almost half of what it has been. However, inventory levels haven't increased very much, as there are also fewer sellers putting their homes on the market.

The amount of cash in the market is still pretty strong and healthy at 20% countywide, and in some of the luxury markets, that number is around 40%. This makes sense as many sellers and affluent buyers were reluctant to put their money in the stocks because the stock market has been schizophrenic.

Expectations for property conditions also changed last year. Properties that are fully remodeled and turnkey are still getting a premium price. A lot of buyers are going for that kind of property because they don't have to do anything to it. However, if a buyer is willing to take on that project or just parlay it for a later date, negotiations can be made. Therefore, I recommend buying a house that needs to be remodeled, maybe doing a few small things to it, living in it for a little while, and then taking on the remodel after the market and inflation settle down a little bit.

If you want any more in-depth information, whether or not you're looking to sell or buy in 2023, reach out to me at (619) 200-3236 or on my website by clicking here. I look forward to hearing from you!

The similarities and differences between 2008’s market and today’s.

Our housing market is certainly transitioning, and a lot of people are concerned about that. However, should people be worried that we’re going to see a repeat of 2008? There are some similarities and differences between the two markets, and I am going to share those with you so that you can make your own informed prediction.

One similarity is the increase in interest rates. Right now, they’re at about 7%, which is the average since 1971 and where things were in 2008. As a result, inventory rose in 2008, and it’s rising now as well. However, the big difference is supply. Right before the 2008 crash, the market had about four months of supply. Today, we’re just over two months of supply.

“The default rate has gone down and is very different than it was in 2008.”

A big difference is the amount of equity that people have is much higher in today’s market than it was in 2008. This means that sales won’t be forced, which is one thing that caused the 2008 market to plummet. Plus, there are more cash buyers in today’s market, which have increased from about 5% to 20% nationwide. Overall, if people can’t sell, they can just put their homes back on the market as a rental, or they can just stay in their houses.

On the finance side, adjustable-rate mortgages are starting to come back but there are far fewer in this market. Right before 2008, they comprised about 35% of the market, but today they only comprise 5%. Plus, underwriting guidelines have changed, which was a big part of what caused the 2008 crash. The Mortgage Credit Availability Index in 2008 was above 800, but now it’s around 100 which is the norm. The lower the number, the tighter the underwriting guidelines are. This is a good sign that underwriters are doing their due diligence and making sure buyers are truly qualified. A result, the default rate has gone down. These changes will likely prevent a glut of inventory coming on the market, which is the opposite of what happened in 2008.

The market is shifting today, as inventory has been increasing and prices have been a little lower. This is providing more opportunities for buyers to find a deal. These buyers are paying more per month. However, they are counting on being able to refinance in the future as rates come back down. I don’t have a crystal ball, but I can tell you the numbers and facts. If you want to talk about your specific situation, call (619) 200-3236 or send me an email. I’d be happy to hear from you!

How the real estate market is typically affected by a recession.

Alarming headlines nowadays are saying that eight out of 10 CEOs worldwide believe a recession will happen within the next year. Therefore, I’m here to revisit this topic and go over how the real estate market is typically affected by recessions so you know what to expect.

The last major recession that we had was in 2008. It was a deep one, and it was driven by the housing market. We saw huge losses, which is why most people go back to that time when they hear the word recession. However, as I've mentioned in the past, real estate prices usually appreciate during a recession.

It may not be in double-digit levels, but it’s still at a respectable rate—6% on average. In four of the last six recessions, we had positive levels of appreciation. The one in 2008 was different, when we had almost a 20% drop in real estate prices. However, that’s not the norm.

“Eight out of 10 CEOs worldwide believe a recession will happen within the next year.”

Also, toward the end of a recession, interest rates tend to drop. That’s good news for the market because the Fed is currently increasing rates to curb inflation. A recession will trigger the opposite of an inflationary time, causing interest rates to decrease.

There was a dramatic decrease of interest rates by about two to three basis points during the past recessions. That would put us into a pretty good situation. With lower interest rates, we will have mild levels of appreciation in the housing market.

If you want any more information regarding this recession or any other related topics, feel free to reach out to me by giving me a call at (619) 200-3236 or sending an email. I’m always happy to hear from you!

A rate buydown is a great strategy for buyers in this market?

With interest rates on the rise, most buyers feel like they're in a bit of a pickle right now. Rates were 3% in January, but now they’re approaching 7%, and prices continue to increase as well. Therefore, most buyers are feeling very fatigued and discouraged. If that’s you, be encouraged because I’m here to tell you about a great strategy.

Due to this market slowing down, buyers can ask the seller to provide a credit that can be applied toward an interest rate buydown. This lets you get a significantly lower interest rate, which makes mortgage payments more affordable. The seller also wins because they get their price, so everyone’s happy.

If you want more information about rate buydowns and the different types of programs available, feel free to reach out to me at (619) 200-3236. I’m happy to help!

Do buyers or sellers have the upper hand in our shifting housing market?

Who benefits from our changing market? By now, you’ve probably heard that our real estate market is shifting. However, what does that mean? Is this good news for buyers, sellers, or both?

In general, demand has fallen in our market. Buyers no longer have the sense of urgency they had in the spring of this year when they would need to pay way over the list price and compete with 20 other buyers just to get into a home.

That being said, we are still in a seller’s market. Inventory remains low overall, and quality homes continue to sell for fantastic prices. However, selling your home may take a few weeks instead of a few days.

“Contingencies are returning to buyers’ offers.”

So who does this benefit? In my opinion, both buyers and sellers have opportunities in this market. For example, buyers looking to move up from a condo to a single-family home are in a great position. Now that the market has slowed down, you can once again make offers on homes contingent on the sale of your old property. This makes moving much easier for buyers.

A trend I’ve noticed recently is that remodeled homes are selling much faster and for more money than properties that need some work. Before, properties that needed work were still selling crazy fast because there was just so much demand. If you’re a buyer who is willing to put some work into your new home, you could get a fantastic deal on a fixer-upper right now.

Overall, buyers have more control in this market than they had before. When the market was crazy, buyers had to waive most, if not all, of their contingencies to stay competitive. Many of these contingencies are coming back now that things have slowed down.

I believe we’re moving towards a balanced real estate market where buyers and sellers can both succeed. If you have questions about today’s topic or anything else, please call or email me. I am always willing to help!

Everything you should know about our current real estate market.

It's already deep into the fall. We're seeing Halloween decorations in yards and kids are back in school. That means it's time for the local San Diego third quarter market update.

We're in a transitional real estate market, so navigating it takes a true professional. I’m here to be that real estate resource for you, so you can be informed.

Starting with the median sale price in San Diego, we have seen a little bit of a recovery. There has been a slow decline since its peak in April, when the median price was $1 million for single-family homes. It reached a low of $900,000 in August and has since increase to $915,000 ending September. The median sales prices for single-family homes increased 7.2% year over year from the 3rd quarter 2021. Most of the increase happened earlier this year. We're going to see little peaks and valleys, but as a whole, I can see that our area is starting to recover.

There has also been an uptick in inventory. We used to only have one month's supply, but now we're at 1.6 months. When you look at the grand scheme of things, we're nowhere near a balanced market of 6 months of supply.

There has been a downward trend in the number of homes sold. This is met with few sellers putting their house on the market.

“We're starting to come back to a more balanced market.”

The sale-to-list price ratio was up around 106% earlier this year, which means almost everything was selling for more than what the seller was asking for. However, now we're below 100%, so we're not seeing as much crazy overbidding.

Homes in high demand areas are still selling well. We're seeing sellers with properties in less desirable areas, such as on a busy intersection, selling at a discount. Some sellers are even deciding not to sell.

Also, there has been a tremendous amount of cash in the market. If you look at all of San Diego County, 20% of all transactions are cash.

I think we're starting to come back to a more balanced market. I don’t believe the market will transition a tremendous amount. Inventory levels are staying flat, even though days on market are increasing, it's just taking longer for homes to sell.

If you have any questions about your local market, I'm happy to share with you what I can find. Reach out to me by calling (619) 200- 3236 or visiting my website. I look forward to hearing from you.

Here’s a strategy to get the best rate when buying in today’s market.

I want to break down one key factor if you're considering buying in today's market with higher interest rates. I'm talking about how various banks and mortgage brokers have different programs and rates.

Doing your due diligence upfront and shopping for a couple of different lenders to see which programs will fit your situation—depending on your down payment, income, FICO scores, and the kind of purchase price you’ll want to make—can make the difference between being able to buy less or more house because interest rates will always affect your payments, and that's what most buyers live in.

You can do this by looking into and comparing different programs, whether it’s a big-box bank like Chase or Bank of America, a credit union, or even a mortgage broker. It could also be property specific, whether it's in a condo or a house.

There are a lot of variables that are involved. If you want more information on this or have any real estate-related questions, call (619) 200-3236 or visit sdcoastalagent.com. I’d love to connect with you!.

Three things you have to consider when listing your home in today’s market.

Today I want to share three key factors you must consider when selling your home. As a special guest, we have Azzie here to join us! So what are the three things you have to consider if you want to sell your home in today’s market?

First, you need to price your home right. We still have very low inventory levels, but we are also seeing a drop in buyer demand. Due to this, there's no huge sense of urgency to buy. Moreover, you have to consider factors like what kind of buyer pool is in the market.

Currently, many buyers are passing on homes that don’t have desirable elements. If the property is on a busy street, they may still buy the home, but they won’t pay above the asking price the same way they would have several months ago, which is why the price has become a very important element. Otherwise, the house will sit on the market for a while, and you’ll end up chasing the market down.

Second, you have to keep your emotions in check. As a homeowner, you usually have a lot of sentimental value in your property. You lived there, and you probably raised your kids in that home. Your emotional attachment may get in the way when you negotiate the offer, so the more you can put on your home seller hat, the better of a position you'll be in when you list your house on the market .

“You have to keep your emotions in check.”

Lastly, you have to properly stage your home. Like staging the set for a movie or play, you have to set the tone and tell the story. Sometimes this involves bringing in items such as furniture, lamps, lighting, paintings, etc. Other times this can include decluttering. You have to take out the personal elements in the home, because you want to make sure that the buyer can envision themselves and their personal items in there.

The personal belongings you have in the house can sometimes stand in the way for the buyer to truly envision themselves in the space. Maybe there's a lot of family pictures on the wall, which can make them feel a little uncomfortable or make it harder for them to picture themselves living in the house. The more you can cater to the majority of buyers, the better the position you’ll be in. Staging can also involve freshening things up, such as changing a couple of wall colors or some flooring.

These are the three main factors that we need to consider when putting the house on the market. There're plenty more, but it typically depends on what the house and market is like. If you guys want to carry on this conversation, feel free to reach out to us at (619) 200-3236 or visit sdcoastalagent.com.

Thanks to forbearance, we won’t see many foreclosures, so don’t worry.

Today I will share some stats that explain how the forbearance program has affected the market. When the pandemic first hit, most experts thought our real estate market would crash. They predicted high unemployment that would cause a tsunami of foreclosures. Essentially, they expected it to play out like the last real estate bust in 2008. However, a forbearance program was implemented which allowed nearly 5 million financially struggling homeowners to stay in their houses during the pandemic when housing was more important than ever.

“Forbearance was healthy for the market, and things are looking good.”

Since the forbearance program ended, over 80% of those homeowners have either paid off the forbearance in full or have worked out a payment program with their lenders. Only 18.4% of financially struggling homeowners haven't done so yet. However, the forbearance program, low interest rates, and the rise in housing prices have given these homeowners additional equity in their properties. That equity is incentive for them to talk things through with their lenders rather than walk away from the property. Ever since the foreclosure moratorium was lifted, we’ve seen a slight uptick in foreclosure activity, but it's not anywhere near what it was from 2017 to 2019.

Nationally, inventory is at about 1 million units of housing, which is two months of supply. Even if we put the 1 million properties still in forbearance onto the market and doubled our inventory, it would still only be about four months of supply, which is still a seller's market. A balanced market has about six months of supply, so forbearance was healthy for the market, and things are looking good.

If you have any questions about the real estate market, feel free to reach out to me at (619) 200-3236 or visit sdcoastalagent.com. I look forward to hearing from you and helping you reach your real estate goals.

Why you shouldn’t put off your plans if you’ve been considering buying.

Some of my clients have been asking, “Is it still a good idea to buy a house now with inflation and mortgage rates at all-time highs?”

There’s no doubt that most of us are feeling the financial pinch with the rampant inflation increases we’re experiencing. Everything is more expensive, but the Federal Reserve has been taking measures to try to offset this inflation. For example, they've been steadily increasing interest rates throughout the year.

The Fed has announced that they are increasing interest rates yet again. Most experts agree that interest rates will come back down once they get a handle on inflation. Still, this has left many homebuyers questioning if it is still a good time to buy, and you may be wondering the same thing.

“I don’t think you should pull back on your plans.”

Obviously, mortgage rates and home prices matter when buying a home. The higher the rate, the higher the payment and the less you can afford to pay for a house. Housing has undoubtedly become more expensive this year compared to last year. However, I don’t think you should pull back on your plans.

Real estate has historically been a good hedge against inflation. Real estate isn’t immune to inflation because housing prices will increase, but homeownership is a great hedge against inflation because you can lock in your largest monthly payment, which is your housing costs. That’s a fixed cost that won’t increase anymore, but home prices will increase, so you’ll gain equity.

There are many other things to consider when purchasing a home. For example, you may need to downsize or upsize and get an extra bedroom. So if you want to go a little more in-depth with your situation, go ahead and reach out to me at (619) 200-3236 or via my website sdcoastalagent.com. As always, make it a great day!