Real Estate Watch – Voak Homes
Some are calling the top of the U.S. market – what about San Diego?
WGary Keller, one of the founders of Keller Williams, created national headlines when he recently went on the record calling a market top nationwide. He said the market is going to shift. While some signs are there in many markets, I think there is a possibility that the opposite happens this coming spring in inland San Diego.
Currently, the local market is split into two factions. The entry market shows strong growth with solid appreciation. The North County Inland attached market (PUSD, Scripps, and Mira Mesa) showed prices up 15% year-over-year while the number of homes for sale is down 32%. Conversely, the detached single family market is down 2% in price and inventory is down 10% (all data from SANDICOR MLS as of 9/8/16).
When I looked past the headlines and dissected the market data, I found that the worst-performing sector of our local market has been detached homes between 2,500 and 3,500 square feet. Under 2,500 square feet, the market is strong, with prices and demand increasing (+5% & +26%) and inventory decreasing (-20%). Once we get between 2,500 and 3,500 square feet however, prices and sales are down (-1% and -13.4%) and inventory is down slightly (-7%).
I believe this shows that family formations are pushing people out of apartments and into attached housing, allowing those selling the attached homes to move up. But they are doing so more conservatively than in the past. Rather than stretch into 3,000 square feet, they’re reaching less and purchasing smaller homes. The result is that entry-level and what I call “first move-up” market prices are rising while prices at the next level are stagnant. This creates a smaller price difference between the 2,500- and 3,500-square-foot homes.
Why is this happening and what might make it change? I think it’s the preponderance of negative news over the summer. I would not be surprised if, once we enter 2017 and people realize neither President Clinton nor Trump is as bad as they sound now, people start buying larger homes again. When they do, they will find very limited inventory, creating a squeeze and driving prices higher.
For some, this squeeze could work in their favor. For others, this could create difficulties competing for limited inventory. Regardless of which side of that equation you are on, you can strategically navigate the market to your benefit with the right representation and a good strategy. If you would like to discuss how this might impact your personal situation, I stand ready to help.
Scott Voak, the top selling agent since 2008 (data from SANDICOR MLS as of 12/31/2015). Email him to subscribe to his weekly real estate newsletter – Monday Morning Coffee.
Scott Voak, MBA – Broker
Managing Partner, Inland Corrido
CAL BRE #01153157
10815 Rancho Bernardo Rd #390
16710 Bernardo Center Dr.
(888) 311-6311 | Scott@VoakHomes.com