San Diego is in the midst of a BIG inventory shortage right now, so I wanted to write up a post about what exactly that means for home buyers vs. home sellers, and how you can win in either position.
From January 2015 to January 2016, Zillow reports that San Diego had the largest inventory drop in the entire nation (a 30% decline, approximately). The number went from 8,051 down to 5,617. This has a number of implications for both buyers and sellers, which I'll break down below:
Buyers may feel like they are having a hard time finding a home to purchase in their price point. This is because limited inventory means fewer houses for qualified buyers to offer on, often resulting in multiple offers, which drives the price up (and sometimes out of the buyer's budget). In order to win in this market, buyers should get pre-approved (not just pre-qualified) BEFORE starting the house hunt. When a buyer does find the perfect home, if he is not pre-approved, that will delay his ability to offer on a house by a couple of days (or more) and it will likely already be under contract by the time he has the pre-approval letter in hand. Also, rather than starting with a lowball offer, come in with an aggressive first offer to show you are serious about the property. The exception to this would be if your Realtor advises that the home is significantly overpriced. One final way buyers can win in this market is to get CREATIVE! Have your Realtor try to find out if there are any special terms the sellers are looking for, such as a long Escrow (or very short Escrow), rent-back period, willingness to keep current tenants in place until their lease is up, etc.
As a seller, overall, you will benefit from the inventory shortage. As mentioned above, limited inventory often means multiple offers for you. It is important to have your Realtor carefully explain the pros and cons of each offer received so you can make a great decision about which offer to move forward with. One thing to note is that if you are selling AND buying, you will face the same challenges on the "buy side" as other buyers. One way to remedy this is by making the sale of your home contingent upon the purchase of a new property. That way, if you do face road blocks or difficulties on the buy side, you have a way out of selling your current home.
This graph shows the number of active listings in San Diego from 2013-2016. You'll note how much the inventory has declined throughout these three years.
It is possible for both buyers and sellers to have great success in San Diego. However, it helps to know the state of the market in order to figure out how to best position yourself to get the most for your money (or the most for your property). Let me know if you have any questions about the San Diego real estate market and I'll be happy to help!