Today I wanted to give you my forecast for the 2017 real estate market here in San Diego.
According to sales transactions that I’ve seen, San Diego is definitely in a seller’s market. That means we have less than three months of inventory. In fact, some of our sub-markets have less than one month of inventory. Those areas are really hot.
All the trends look positive for 2017, and we’ve got some cautious optimism for President-elect Donald Trump when it comes to lowering taxes and decreasing regulations. It should all be a mini boom for the real estate industry.
We know 2016 was a really good year for real estate in San Diego. According to the San Diego Association of Realtors, home prices have increased 6.5% in the last 12 months, and the average time to sell a home was 35 days. This is down from an average of 39 days in 2015. In short, home prices are going up and homes are selling quickly.
If you want to buy in 2017, you might want to act fast.
However, the rate of appreciation is expected to slow later in 2017, and Zillow projects that values will only rise 1.8%. The hottest part of the San Diego market lies in lower-priced homes where demand is the strongest. Higher-end homes are taking longer to sell and, frankly, there just aren’t enough buyers for all the luxury homes available. If you want to sell a luxury home this year, you’ll need an innovative and comprehensive marketing plan to accomplish it.
The higher the price of the home, the fewer qualified buyers you will find. It seems to be amplified here in San Diego. If you’re looking to buy your first home in the lower end of the price spectrum this year, expect some stiff competition in 2017.
You’ll also want to keep an eye on interest rates. The Wall Street Journal predicted that we’ll see three rate hikes by the Federal Reserve in 2017. In 2016, 30-year mortgages had an average rate of 3.7%, and the Mortgage Broker’s Association predicts that by the fourth quarter of 2017, rates will be at 4.4%, which would be a substantial bump.
If you’re thinking at all about buying in the year, it’s probably wise to do so sooner rather than later. If you have any questions about buying a home, don’t hesitate to give me a call or send me an email. I’d love to work with you!