Windermere Real Estate recently released its Southern California Gardner Report – Third Quarter 2017. This regional report is produced by Windermere’s Chief Economist, Matthew Gardner. He analyzes key market data points relating to home values and real estate sales for Windermere’s different franchise office regions. Too see the full Southern California report along with Matthew’s commentary, click here to check out his blog.
For me, this was a really eye-opening report that shows the current state of San Diego County real estate compared with Southern California’s four other primary counties, Orange County, Riverside County, San Bernardino County and Los Angeles County. The report essentially chronicles the cold hard facts about each market, so what you take from the data may depend on your outlook.
What the Report Shows
At first glance, it may sound like some of the market information reported for San Diego County in the third quarter is somewhat negative. However, I do not see it this way. No matter how you look at it, it is clear that the real estate market has been extremely hot throughout Southern California the past couple years. Home values continue to rise while homes for sale are selling extremely quickly. This is mainly because mortgage interest rates remain low and so do housing inventory numbers. Houses are in high demand, yet the interest rates make them very attainable despite rising prices. Eventually, this trend may level out, but I don’t see it happening any time soon.
The San Diego County economy continues to expand and that’s a trend expected to keep continuing into 2018. Let’s dig a little deeper into some of the Gardner Report’s numbers regarding our market, though.
Home Sales Activity
From the third quarter of 2016 to the third quarter of 2017, the number of home sales in San Diego County actually dropped by 5.7%. I feel this is more of an issue of inventory than demand. Home buyers are eager to purchase in this highly desirable market, but sellers are holding on as their property values increase. When homes do go on the market, they are sold quickly (just 26 days on average in San Diego County).
From a mortgage standpoint, this means that potential home buyers need to be very prepared before they even start looking for a home. You need to get pre-approved (not just prequalified) for a loan. This will help you understand what you can afford while also showing sellers that you are a serious buyer when you make an offer. When they see you have already been pre-approved for a mortgage loan, you will look like a safer bet to close on escrow. This is very important. There are other things you can do in advance of applying for a loan, including working to improve your credit score and your overall financial health.
Of all the Southern California regions studied in the Gardner Report, San Diego showed the most home price growth from this year to last. Home values in the third quarter of 2017 were up by 7.9% compared to the third quarter of 2016! Indeed, this is a strong seller’s market right now.
This data shouldn’t worry home buyers, but it should spark a feeling of urgency. Home values may eventually start to balance out again and inventory will expand, but interest rates are likely to rise as that happens. It’s all cyclical. If you have been on the fence about buying or starting your mortgage loan pre-approval, now is the time to take action and start making your move. Homeownership will always have its advantages over renting with better tax benefits and the opportunity to earn equity as home values increase over time.
To learn more about what’s happening in the San Diego County real estate market or to get started on your mortgage loan pre-approval process, give me a call. I always like to keep my finger on the pulse of our local market and I will do everything I can to help you make the right mortgage decisions. I’ll help you explore your options and do what’s best for your financial future. Call me or my Transparent Mortgage team at (619) 929-0199.