The low-inventory trend is holding steady in the San Diego real estate market.
That was the message delivered to hundreds of Realtors at the fifth annual Regional Real Estate Summit of the Greater San Diego Association of Realtors in September at Sheraton Harbor Island. The crowd of 550 included San Diego County Realtors, as well as real estate students and professionals looking to return to real estate.
One stunning statistic on inventory: At the lull in the housing market, the region was at 24 months of inventory; now we are at two months. Overall in California, inventory is at 2.9 months. For homes priced above $1 million, inventory is slightly higher at 4.6 months.
Rather than simply hear just from real estate professionals, this year SDAR brought in panelists from related industries — construction, legal, banking and economy — who gave their perspectives on interest rates, jobs, rising home prices and construction.
Four years after the housing crisis, where are we? Home prices are rising, the purchase market is emerging, affordability is high, interest rates are low for now, delinquencies are declining and private capital is still on the sidelines.
But let’s get back to low inventory. Existing home sales are constrained by supply; part of that is because we are rebounding so quickly. A bigger source of low inventory lies in consumer confidence. Homeowners are able to make their mortgage payments, so the last thing they want to do is move into a bigger house and take on a bigger payment.
Additional market characteristics of note include a rapidly disappearing distressed home market and a significant shift to upper-end sales dominating the homebuying scene. Foreclosure resales made up 7 percent of home sales in June, down from 20 percent.
The San Diego real estate market also is seeing a strong trend of cash buyers, particularly international buyers. The number of international buyers in the local housing market rose steadily from 2010 to 2012, and then jumped this year, with investors from China leading the way.
The U.S. market is still relatively inexpensive when compared with their home markets. The strength of local universities also contributes to this trend. Many of these buyers are investing in properties for students attending college here. These investors also are responsible for pushing up prices.
While affordability remains high for now, California has seen a sharp increase in median prices since February 2012 — a 29.8 percent year-to-year jump.
In San Diego, home prices in June rose 19 percent from one year ago, the largest year-over-year jump since March 2005, according to the county Treasurer-Tax Collector’s Office. The region is outpacing national home-price growth, which was 12 percent when tallying all 20 areas in the index.
The upturn in housing prices is partly artificial, with no reason to fear another bubble. However, affordability could become a challenge for first-time buyers if interest rates and prices continue to rise.
Lee is board president of the San Diego Association of Realtors.