Price Downtrend Continues in Residential Market

Single-family home prices slid in January, dropping well below what they were a year ago, and the number of homes sold also fell.

At the same time, the number of homes up for sale rose slightly, but they were taking longer to sell, according to the Greater San Diego Association of Realtors.

The January decline in single-family home prices continued a trend that started when the Federal Reserve began bumping up interest rates with the outlook of what’s to come hazy.

The median price of a single-family home in January was $849,000 compared to $880,000 in January 2022, according to the Association of Realtors.

By comparison, the median price of condominiums and other attached homes was slightly higher in January, up by nearly 1% from a year ago at $590,000 compared to $585,000 in January 2022, the association reported.

Rising Rates to Blame

Rising interest rates were blamed for the decline in sales, with 886 single-family homes sold in January 2023 compared to 1,404 a year ago and 459 attached homes sold compared to 771 a year ago.

Despite the sluggish market, the number of single-family homes and attached homes on the market is higher than it was a year ago, with 1,666 single-family homes up for sale in January compared to 1,458 in January 2022 and 861 condos and other attached homes for sale in January 2023 verses 632 a year ago.

It took an average of 43 days to sell a single-family home this January compared to 24 days a year ago and 40 days to sell an attached home verses 19 in January 2022.

Seller’s Market Continues

Association President Frank Powell was wary of making any predictions on what will happen to the resale housing market through the end of the year.

“At this point, it seems like it’s a more stable market and therefore you could argue that it’s more of a normal market,” Powell said, but he cautioned “be careful when you listen to speculation because markets do change rapidly.”

Typically, the number of homes on the market tends to rise around this time of year, but Powell said “I tend to close deals pretty consistently all year.”

San Diego Remains a Seller’s Market

Despite declining prices, Powell said that San Diego remains a seller’s market.

“The reason why it’s a seller’s market is because of supply and demand, and although the inventory has slightly increased, in the bigger picture there’s very little inventory to select from,” Powell said.

Nevertheless, Powell said sellers have to be realistic in setting asking prices, disregarding the sky-high figures of 2022 when interest rates were low.

“Even though the interest rates have dropped, they’re no longer sub 3% or 3%. They’ve still almost doubled in the last three months,” Powell said. “You have to price on current market conditions and current means in the last couple of months. If you go back six months, you’re not in the current market because things change rapidly.”