Nationally, the first half of 2021 has been a head-spinning, record-breaking year for real estate, but how long can this continue? Here are a few facts I found interesting that should help us all better understand what to expect in the coming months. This is a national snapshot based on figures provided by the National Association of Realtors and Moody’s Analytics.
Have we hit the top of the market? The short answer is maybe. At least we’re seeing signs that it is softening. Recently the rate of price growth has started to slow and we are seeing fewer applications for purchase mortgages. According to the Mortgage Bankers Association new applications for purchase mortgages were down 14.2% year over year for the week ending June 18. Median home list prices are still 12.2% above what they were a year ago, but that is less than the 17.7% increase we saw this last April, year over year.
What is driving the slow down? One important element is our changing needs. With kids going back to in-school learning, gyms re-opening and more and more people returning to offices, the need for larger spaces or a second getaway home are diminishing.
Many buyers are also just fed-up. According to Ali Wolf, chief economist at the building consultancy Zonda, “It’s a buyer’s protest.” Buyers are tired of the bidding wars that result in exorbitant over-asking prices and the lack of inventory. Many are going to step back and wait, also afraid of buying at the top of the market. In a builder’s survey conducted by Zonda in April, 20% of buyers were nervous about high prices. In May, buyer’s hesitancy increased to 40%.
May was record setting in San Diego County! Yes! All the stories your heard were true. Here are a few key stats from the San Diego Association of Realtors that illustrate just how crazy the market for detached homes was in May of this year, compared to 2020:
Median Price - $865,000, up 31.1%
Number of closed sales – 2,185, up 64.4%
Days on Market – 20, down 31%
And the craziest numbers of all, the Inventory of Detached Homes for Sale in May:
2019 – 10,210
2020 – 4,096
And in 2021, just 1,818 homes! No wonder there are bidding wars!
Lacking a reliable crystal ball, I’d venture to say that the numbers for June in San Diego County will follow the nationwide trend and show a slight softening of the market. This will have virtually no effect on sellers but could open the market slightly for frightened buyers. I’ll keep you posted, but in the meantime, please call with any questions. And of course, your referrals are always appreciated.