Spring 2021 Market Update
Updated on May 13, 2021
Written by Ken Tritle, Realtor® (Questions? Call/Text 760-798-9024)
What’s happening with the North County San Diego housing market?
The real estate market in North San Diego County has sailed into uncharted territory, making some wonder if the drop-off at the edge of the earth is somewhere near ahead.
Decent homes, priced within reason, are selling in a matter of days, at list price – or in many cases – over and WAY over the listing price.
The driver behind all of this rapid home appreciation is low inventory of homes for sale. Couple that with historically low interest rates, the same large number of people wanting to move to North San Diego County from all over the United States, PLUS the COVID-driven desire to escape from urban, city life into the suburbs, and you have a perfect storm of high demand and ultra-low supply.
Of course, this makes home sellers happy.
But home buyers, on the other hand, are getting extremely discouraged by making offer after offer and not getting a home. This is especially true of home buyers needing to either sell their current home to free up the funds to pay for the new home, or those buyers who need to finance the purchase.
Woe onto the buyers who enter into this unprecedented market unprepared for the competition that they will encounter.
Jump to the latest North County San Diego housing market statistics here.
Because home sellers currently have the advantage of multiple extremely good offers, they can be choosy in which one that they will accept. Gone are the days of cash buyers earning price discounts. Currently, many all-cash buyers are offering extremely competitive deals to home sellers – yes, even above listing price.
Home sellers will nearly always choose a strong cash offer due to them having fewer contingencies, such as appraisal and loan approval contingencies. Since cash buyers don’t need to wait for a loan to be processed, they can also complete their due diligence – such as home inspections – and close escrow much more quickly than those who are financing the purchase.
Sellers opt for what they see as a more certain deal with cash buyers, as no lender can throw a monkey wrench into those transactions. Obviously, shorter inspection periods and quicker closing of escrow are very appealing to sellers.
Many buyers are resorting to risky tactics to make their offer stand out from all of the rest, by doing things like waiving Appraisal or Sale of Buyer’s Property Contingencies, foregoing home inspections, home warranties, and taking on the burden of paying for items that, in a more normal market, are customarily paid for by the seller.
There are numerous risks associated with these practices; buyers could lose their Earnest Money Deposit if they needed to back out of the deal due to not being able to complete the sale of their property in a timely manner.
If the home doesn’t appraise for the offered amount (and many homes are not currently appraising for these higher prices), then it would be up to the buyer to cover the delta between the loan amount and the purchase price, which could be in the tens of thousands of dollars.
Without a home inspection, a buyer could be purchasing the proverbial money pit, on top of already paying a premium for the property.
In our small segment of real estate of retirees downsizing immediately after selling the family home, many active buyers that you might be competing with are purchasing in cash. In addition, the type of home, or location, may also attract more cash buyers than a tract home might, as “downsizers” prefer single-story or golf course homes, etc.
Read from our blog: Tips and Advice: Need to sell home before buying my forever home
Can non-cash buyers compete in this market?
YES! It requires more work, and possibly a bit of luck.
But we’ve had success in getting these types of buyer’s offers accepted. If you’re a buyer who needs financing to purchase, make doubly sure that you have a currently valid loan pre-approval (submitted tax returns and all) and a commitment from your lender as to how quickly they can give you a final loan approval.
Also, it would be wise to have the correct expectation going into this ultra-competitive market, that you may not get the very first house that you offer on. You will likely need to make more than one attempt at securing your next home. Just be prepared to do your absolute highest and best on each home that you make an offer on. Have confidence in your real estate agent of choice, and faith in the process.
Why might there be a lack of inventory in the 55+ or retiree segment of real estate?
It could be due to a few factors, related to the COVID-19 virus. There has been a fear of assisted living and memory care facilities since the beginning of the pandemic, as initially these were some of the hardest hit places in the United States. Individuals and their families have been reluctant to move their loved ones out of the relative safety their homes, out of fear for their lives.
The lockdown and an abundance of caution have also had an effect on senior’s health, often in a surprising and positive way. The flu and other respiratory illnesses were nearly nonexistent this past season, averting the cascade of declining health normally associated with those illnesses.
When will this challenging and quickly appreciating market slow down?
No one really knows.
Our belief is that it mostly hinges on two things, namely, how effectively we get beyond this COVID-19 crisis, and how world events effect our economy.
If we’re able to come out of COVID-19 effectively and rapidly, expect the economy – and home prices – to continue to rise. If we experience more waves of infection due to new variants of the virus, things could begin to cool off.
Read more from our blog: Your Two Year Plan To Buy and Sell
Written by Ken Tritle, Realtor® (Questions? Call/Text 760-798-9024)
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Thanks for visiting DreamWellHomes.com | Find Homes For Sale Here | Need help finding the right property or community? Got questions regarding selling your home? Please contact Jean and Ken Tritle (Realtor®), DreamWell Homes, Call/Text 760-798-9024, Real Estate Broker DRE#01777754 | Realtor® DRE# 01892793.