February 14, 2022 Snapshot
Initially, record low mortgage rates paved the way for white hot demand. An unbelievable 17 record lows were achieved after the country slipped into a pandemic back in March 2020. It is no longer low mortgage rates that are stoking the fires of demand; instead, it is the severe inventory shortage. Today, inventory has risen slightly to 1,537 homes, but that is still far from normal. The three-year average prior to the pandemic (2017 through 2019), there were 5,400 homes, or an extra 251% more. There are simply not enough homes available to match demand.
Demand, the number of pending sales over the prior month, has exceeded the inventory level since January of last year. That’s a full year where demand has been outpacing the supply of available homes. It is no wonder that the inventory has fallen to an incredibly catastrophic level. There really is nothing available to purchase. Every home that enters the fray is inundated with showings, and, if not priced ridiculously out of bounds, generates plenty of offers. With so much buyer competition, sellers get to call all the shots. Buyers have been willing to wave inspections, wave the appraisal contingency, offer a 60-day rent back, and close in a timeframe that is most suitable for the seller. Carefully pricing a home is crucial to obtaining the best outcome regarding price and terms. Pricing at or slightly above the last comparable pending or closed sale will expose the home to the largest buyer pool. Stretching the initial asking price considerably above the comps may still result in achieving the ultimate goal in selling; HOWEVER, it will be at the expense of not obtaining the highest and best price and terms.
The active listing inventory fell by 304 homes in the past couple of weeks, down 17%, and now sits at 1,537 homes. This drop comes just after a rise of 27% from the previous two-week period. With the dip in inventory, the current level is by far the lowest level for a February start.
Demand increased from 2,020 to 2,407 in the past couple of weeks, adding 387 pending sales, up 19%. The limited number of homes available has translated to lower demand readings. Typically for a start to February, demand rises by 21%, or 477 pending sales. There is quite a bit of pent-up demand from a deluge of unsuccessful buyers who have been attempting to purchase for months now.
With the supply dropping significantly and demand surging, the Expected Market Time (the number of days to sell all San Diego County listings at the current buying pace) decreased from 27 days to 19 days, matching the lowest level since tracking began a decade ago reached last April 1st.