2020 has prompted a lot of people to fundamentally rethink their housing situation, whether it be a recognition of the need for more space in light of a new work-from-home arrangement, or a yearning for more outdoor space to ease the mental strain of quarantine.
So many employees have been given the green light to work remotely and are now realizing that they’re no longer tethered to any specific city—why not move elsewhere and optimize your living conditions? We’ve had clients move out of San Diego to beautiful, spacious places like Montana or to Nevada and Texas to get a break on their taxes. We’ve also welcomed plenty of newcomers to our local market from New York City, who simply grew tired of the dense urban lifestyle and cold weather.
There has been a revolving door of people coming into and out of our market, but we’re netting more residents than we’re losing; demand remains sky-high. The latest stats show us up 10% over last year, and San Diego is third only to Phoenix and Seattle in terms of appreciation nationwide. It’s clear that ours is a strong, fast-moving market, but where do we go from here?
Right now, at the very end of 2020, we’re primed yet again to log record-low inventory; as of the day prior to this recording, we had 3,033 homes on the market across all of San Diego County. That number may not mean a whole lot to you by itself, but consider this: Looking at the past 16 years (which is as far back as our charts go), the lowest level of inventory recorded was 4,200. We’re roughly 40% below where we normally are at this time of year, and that’s setting the stage for our 2021 market.
Interest rates continue to hit historic lows (they’re in the 2s now, if you can believe that) and conforming loan limits are actually being bumped up for the fourth year in a row. The new limit of $753,000 will make it easier for consumers to get better rates in this high-priced market. Here’s an interesting stat: The average age of today’s first-time homebuyer is between 28 and 30 years old, and next year, we’ll have 15 million millennials—the largest generation in American history—rolling into that prime age bracket. It’s reasonable to assume, then, that we’ll only see more demand and upward pressure on the market as the buyer pool swells.
Overall, we’re expecting a strong and competitive market in 2021. Of course, there’s no shortage of unknowns concerning to politics and the pandemic, but even so, our San Diego market should continue to be healthy well into this coming year.
I wish you the best this holiday season. As always, reach out to me by phone or email if you have any questions or real estate needs. I’d love to chat with you. In the meantime, stay safe, wear a mask, and if I don’t hear from you soon, then I’ll see you in 2021!