Introduction
Chad Dannecker: I am Chad Dannecker with Dannecker & Associates at Compass coming to you with your Early October San Diego County housing market update.
Interest Rates
With interest rates right now, we're finally feeling like we're hitting a ceiling on our interest rates. We feel like we've found a ceiling at about $7.6\%$.
You know, for the majority of August and September, we were hovering right around $6.75\%$ on that 30-year fixed-rate mortgage. And then late September, early October, we got just a shoot up, and we were wondering, "Oh my gosh, when does this end? Where do we stop?" And we think, hopefully, we found that ceiling at $7.6\%$.
We'd love to see interest rates kind of fluctuate somewhere between $7\%$ and $7.375\%$ for the remainder of the year, but we'll have to just keep following that closely and see where we go.
Active Listings Inventory YOY
With regards to active listing inventory right now, we are about $2\%$ less listings than we had this same time last year. And of course, you can see we peaked right here in August. So we did peak right here in August, and typically this time of year, the number of active listings will trail down pretty quick.
This year, as you can see, it's kind of lingering a little bit longer. We're not trailing down as fast just because there's less buyer demand in the market.
Demand Year-Over-Year
So, let's talk about demand here.
Current Demand Drop: Demand is down 63 sales right now, which is about $4\%$—the lowest level we've had since January of this year.
Year-Over-Year Comparison: Last year at the same time, pending homes were up $14\%$ (or 219 more pending home sales) compared to today.
Pre-COVID Comparison: The three-year average prior to COVID had $83\%$ more pending home sales than what we've got going today, which is just mind-blowing.
Expected Market Time
Of course, with demand being down right now, our expected market time is going up. Expected market time went up in the last two weeks from 106 days to 111 days.
Market Time by Price Range & Luxury Market Dynamics
For our luxury market (inventory priced over $2 million), demand fell $7\%$ and the number of listings increased by $2\%$. So it looks like the luxury market might start to slow down a little bit.
The interesting contrast between price tiers:
The $2M and Less Market ("Normal Market"): Buyers in this price tier are heavily attached to interest rates and head winds.
The $2M+ Market ("Luxury Market"): Higher-end buyers ($3M, $4M, $5M, $6M+) are much more attached to the performance of the S&P 500 and equity markets. With equity markets hitting all-time highs, we still expect to see quite a few sales in key coastal markets.
Conclusion
My name is Chad Dannecker. If you have any questions for me, real estate is hyper-local. We can dig right into all the details for areas specifically Point Loma, La Jolla, Coronado, downtown—we work in all those markets and we'd love to help you out.
Have a great October!
