The San Diego housing inventory has a massive impact on the market as a whole. Impacting prices, time on the market, and the overall buying experience, the total supply of housing is felt by buyers, sellers, mortgage professionals, and real estate agents.
Whether you are thinking of buying a new home, want to list your house for sale, or simply want to better understand the craziness that is the current real estate market, you should understand the San Diego inventory and how it can impact your options.
San Diego Housing Inventory: Stats, Causes, and How it Will Effect Your Experience
The Housing Shortage: A Look at the Stats
If you’ve spent any time in San Diego over the past few years, you know that the market is loaded with high-priced houses that are often purchased before you even have the chance to look at them. Homes go on the market and are scooped up in a flash, often at a number that exceeds the asking price. San Diego, of course, is far from the only market experiencing this phenomenon.
In San Diego, as in much of the nation, real estate inventory has steadily declined; at some points it rapidly declined. Data from the Federal Reserve Bank of St. Louis provides a useful starting point. Their 5-year data shows a high mark of 8,021 active listings for San Diego County in October of 2018. Total numbers fluctuate throughout the year, with highs in summer and lows in winter, but there was usually somewhere between 5,000 and 7,000 listings in San Diego County.
Currently, there the organization says there are 3,827 active listings in San Diego County. (Numbers from Sept. 2021)
That’s a low number, but the Federal Reserve Bank’s numbers actually show a rebound during the summer of 2021. Although there was a dip from August to September, most of the spring and summer saw month-to-month improvements.
Information from Zillow, while showing different numbers, repeats the trend. Their inventory data shows a recent high of over 10,000 homes in the fall of 2018. That number dipped down to 5,227 at the end of February 2021, with modest increases throughout the year. Most recently, their data shows 6,802 active listings at the end of August. Again, it’s a modest gain, but far from the levels we’ve seen in the past.
The San Diego housing inventory reflects national trends. The Federal Reserve Bank of St. Louis shows over 1.5 million active listings across the country in the summer of 2016. The summers of 2017, 2018, and 2019 all showed numbers around 1.4 to 1.3 million listings. By early spring of 2021, there were less than 500,000 listings. Roughly speaking, the nation was looking at about 1/3 of the “normal” inventory. So San Diego, at least in this case, is similar to the country as a whole.
Why is there a Low Inventory in San Diego and Across the Country?
There are many potential causes for low San Diego housing inventory numbers, and just as many theories for why there is a shortage in our area and the nation as a whole.
Pretty much everyone agrees that COVID is a major contributor to the low numbers. COVID-19 and the responding shutdowns significantly disrupted the supply chain and made it more difficult to buy and sell a house. Even articles attempting to shift the blame away from COVID can’t ignore the fact that “COVID-19 is not completely blameless.”
One of the main reasons, it’s often agreed, for the low inventory is that homeowners were (and to some extent still are) hesitant to place their homes on the open market. Concerns about bringing the general public into their home for showings and open houses forced many people to avoid selling. But this is only part of the issue, as the total inventory consists of both old homes and newly-built construction.
The supply chain for building materials was disrupted, making it harder to build new homes. Even if they can find and afford the materials, construction companies are having trouble finding enough employees, severely limiting their ability to build new homes and provide relief from the housing market.
How the San Diego Housing Inventory Impacts Prices and Other Factors
A low inventory creates a ripple effect all across the market, impacting homebuyers, current owners, and anyone who makes a living in the real estate industry, including agents, inspectors, and mortgage professionals.
The most obvious impact is pricing. As classic economic theory states, and history has shown over and over, when the supply of an in-demand product (in this case, homes) is low, the price will go up. If there are three people looking to purchase from a supply of six homes, competion is fairly light. But if those same three people are in the market and only two homes are available, someone will be left out. High prices and bidding wars are almost inevitable.
Low inventory also effects time on the market. When the supply is low, people purchase with near desperation; in some cases literal desperation. Instead of taking their time, looking at multiple houses, and finding the perfect home for their specific needs, they find a home that fits their budget and throw out an offer, usually at asking price.
We have seen this trend in San Diego, as time on the market and inventory pretty much dropped together, all while prices increased. (Correlation, which means things happening at the same time, is not causation, which means something directly causing another thing to happen. However, it seems fair to assume that low inventory has contributed to high prices and low market times.)
Although it’s hard to quantify, low inventory generally leads to a less enjoyable, often stressful buying experience. When inventory is low, you simply don’t have the opportunity to casually browse homes, make offers, negotiate purchase agreements, and generally enjoy your buying experience. Some, perhaps, may enjoy the whirlwind caused by the low San Diego housing inventory, but most would prefer a more relaxed buying experience.
Don’t Let the Low San Diego Housing Inventory Stop Your Purchase!
If you are ready to purchase a wonderful home, let us help. We can’t fix the low San Diego housing inventory, but we can help you get pre-approved for a mortgage, making you an attractive buyer while increasing your chances of landing the home you deserve!
Contact us today and start your path towards a wonderful San Diego home!