S.D. HOUSING MARKET TO STAY IN FAVOR OF SELLERS
Report: High demand, limited inventory to keep prices up
Potential homebuyers who hope for better opportunities next year might need to hold their horses.
A 2021 forecast from Irvine-based Reports on Housing predicts San Diego County home prices will continue to rise because of limited supply, and it will remain a market that is weighted in favor of sellers.
Steven Thomas, founder of Reports on Housing, based the forecast on many of the same factors impacting the market this year continuing: Few homes for sale, low mortgage rates and a very limited number of distressed sales.
San Diego County’s median home price was $650,000 in November, up 9.3 percent in a year, said DQNews. Reports on Housing predicts prices will appreciate 6 percent to 8 percent in 2021.
The supply of homes is expected to in
crease as sellers feel more comfortable with moving and having people in their homes. But, that is only expected to happen after widespread vaccine adoption. Thomas said the supply will likely peak around August — meaning January to July will result in the most price appreciation as potential buyers compete for a limited supply.
“The theme for 2021 will be not enough homes for buyers to purchase,” he wrote.
Thomas predicted from mid-August on that it will still be only a “slight” seller’s market, and increased supply will likely slow price appreciation.
Demand is not expected
to diminish, the forecast said, as there are few signs mortgage rates will substantially increase in 2021. However, it is something to watch because slight increases can noticeably change monthly payments.
The forecast also predicted a hot San Diego luxury market continuing in 2021 with sales likely up by 5 percent. In early December, the expected time to sell a home from $2 million to $4 million was about 109 days, down from 277 at the same time last year. Homes more than $4 million sold after an average of 423 days, as opposed to 930 days at the same time last year.
Real estate agents have reported throughout the year that San Diego County has become a hot spot for aff luent buyers looking to own large properties because of the ability to spread out far from others in places like Rancho Santa Fe.
Thomas was pessimistic there would be a wave of foreclosures as federal protections wind down. He said distressed sales, foreclosures and short sales combined only made up 0.7 percent of closed sales this year. Thomas said rising prices would mean homeowners with financial trouble would likely be able to tap into equity and avert going into a distressed sale. He said there will be more foreclosures, but probably more of a ripple instead of a wave seen in the Great
Recession.
Thomas’s report was specific to San Diego County, but it is similar to many national forecasts. Three leading housing economists spoke in early December at the online National Association of Real Estate Editors conference and said more homes should go on the market in 2021 but that it would not stop the increase in prices.
Danielle Hale, chief economist at Realtor.com, predicted home prices would increase 5.7 percent; Lawrence Yun, chief economist at the National Association of Realtors, said 3 percent; and Frank Nothaft, a senior vice president and chief economist at CoreLogic, predicted 4.1 percent.