How San Diego Got Her Groove Back - 2014 Review
2014 was a strange year like none other in recent memory for the real estate market in San Diego, only because of how absolutely normal, stable, and balanced it was. It was fairly uneventful. You may even say it was dull. But that is exactly why it was so fascinating on the tail end of a real estate boom, bust, and boom cycle that was as aggressive as any the market has ever seen.
Let’s take a look at a three key metrics as reported by Trendgraphix™ to get a better idea for how the market has performed during the last year and where we are headed.
Price Per Square Foot
While official numbers were not available at the time that this article went to print, our research tells us that San Diego County experienced roughly 7.4% appreciation during 2014. We derive that by looking at the average price per square foot sold of $315 for November 2014 vs November 2013 when it was $293 per square foot. My personal prediction is that we will experience a very similar 2015 from an appreciation standpoint. I will go on the record as predicting 5% appreciation for 2015.
Days On Market
The average home in 2014 took 46 days to sell compared to 55 days in 2013. So the homes are selling very quickly. Furthermore, keep in mind that this average days on market number includes those homes that took hundreds of days to sell. That means that there are plenty of homes selling in the first few days of the listing or in the first couple of weeks.
This confirms that as agents, we know that with appropriate pricing and strong marketing with a proven plan in place, plenty of homes are still selling quickly. As a seller this is extremely si-highlight--primary information to know when going to sell your home because it tells you that if you aren’t seeing a lot of positive activity right out of the shoot, then something is wrong and an adjustment is needed to your strategy. You should be making those adjustments within the second and third week of a listing at most, not after several months. The market is absorbing the homes that will sell very quickly and leaving the others for dead.
We have seen a steady increase of homes for sale during the last 15 months with the exception of the winter months, which traditionally show a drop in inventory because so many sellers are waiting for the spring before they bring their home on the market. Still, the general trajectory of the supply chart is on the rise.
The San Diego market is experiencing approximately 3.5 months of inventory, which theoretically means that if we stopped listing homes today, it would take 3.5 months before we were 100% sold out of property. The current level is great and considered to be a very balanced and healthy inventory level. The general rule is that 0 – 3 months is a seller’s market with strong upward pricing pressures (where we were in 2013), 3 – 6 months is a balanced and steady market that is typically going to experience single digit appreciation (where we are now), and 6 months or more is a market with too much supply with downward pressure on price (where we were during and in the immediate years after the crash).
We started 2014 with only 2.9 months inventory, and then actually dropped to a low 2.1 months inventory in April. Since April, inventory levels have been on a slow, yet steady, rise. Our current 3.5 months of inventory are the most we have seen since January 2012. It will be interesting to see if it continues to rise or if it levels off moving into 2015.