We are struck by a spate of news stories and statistics that indicate a looming shortage of homes for sale, not only in San Diego but nationwide. Although this seems counter-intuitive at best, consider these year-over-year Q2 statistics from the National Association of Realtors:
- Sales of existing homes increased by 8.6 percent
- Inventory overhang has dropped 24.4 percent
- Median home prices have risen 7.3 percent
What’s going on here? Nothing less than a bottoming out of real estate markets that will, over the next three years, reverse the flood of homes for sale with bona-fide property shortages in the most desirable communities. That includes many areas in San Diego County, in our opinion.
One important metric is the national homebuilding rate, which has been anemic since 2008. Usually, builders erect at least one million homes each year, but the average between 2009 and 2011 has been 647,600 per year. Harvard University predicts demand of about 1.28 million units annually through 2020. Even if these figures are not overly precise, the trend is clear: demand will outstrip supply for the rest of the decade. We are already experiencing this situation in California. Other states feeling the pinch include Nevada, Arizona and Florida, all hard hit in the last four years. Complicating the situation is the fact that home-builders downsized since the real estate crash and are thus responding slowly to signs of increased demand.
As a leading San Diego realtor, we see home inventory levels at about half of what they were a year ago. This translates into multiple overbids, to the delight of sellers. My estimate is that there are 6,000 houses available for sale in the county, compared to 15,000 one year ago. Interest rates have remained low, spurring demand. Also, banks are apparently holding their own REO properties off the market in an attempt to drive up prices. Another sign of the rebound is the return of flippers, who swoop in with cash, buy properties over list price, perform minimal repairs and then resell at a handsome profit. Take a look at the median house/condo price in Southern California as of June 2012 – up $15,000 per unit, to $295,000 from a year ago.
With distressed sales starting to dry up, it’s time for prospective homebuyers to get moving. This may represent the last best opportunity in the greatest buyer’s market in memory. Kindly contact us at (619) 928-9811 and let us help you cash in on this rare opportunity.