We all wish we had a crystal ball to answer this question, but looking at past market numbers enables us to get a clearer view of the future. CoreLogic showed a year-over-year appreciation rate of 3.6% to 3.7% in 2019, and that rate is expected to go up about 1.5% this year. So after a bit of a slowdown, it looks like the market is picking back up, and there are a few reasons why.
The first is inventory. As of the recording of this video, there were about 4,600 homes on the market in San Diego County, which is about where we were during this time last year. From here, it typically increases until eventually doubling in late summer/early fall.
If you’re looking to sell, there’s not a lot of competition out there at the moment. The level of competition will pick up over time, but buyer activity will increase as well. In the tract home areas, homes are sitting on the market a little bit longer, but in other coastal neighborhoods of Bay Park, there are as few as two homes on the market.
The point is, low inventory and historically low interest rates are what’s driving a lot of the market. Developers are seeing this, and although there hasn’t been as much new home construction happening lately, a lot of new rentals are being built.
What’s unique is that most of these rentals aren’t being built downtown. They’re spread out from Chula Vista to Carlsbad and Vista, and if you look at their forecasted prices, some of the studio apartments are starting at about $1,800 per month. In Pacific Beach, studio apartments are starting at $2,500 per month, and 2-bedroom units are listed at $4,333. You can see how this increase in pricing would make renters consider just buying a home.
On the lending front, FHA is now allowing spot-approvals for condos, so you don’t have to undergo a lengthy process to get your condo FHA-approved. Also, the VA is doing away with its 0% down loan limit. As long as you can qualify for a VA loan, you can use 0% financing for any purchase price.
The bottom line is this: A lot of factors are making it easier for buyers to get into homes, which will create more demand and continue driving appreciation.
If you have any more questions about our San Diego market moving forward in 2020, don’t hesitate to reach out to me. I’d love to help you.