2024 Real Estate Trends

By Sarah Ward. REALTOR

Looking over residential real estate data for the last few years, some trends are becoming clearer. The population of “Accidental Landlords” is growing. With most homeowners locked into a mortgage rate in the 3’s, properties are now more likely to be rented out instead of sold. For example, when older people in the past might have wanted to sell their large family home and downsize into a smaller home, condo, or senior housing, this category of homeowner is now more likely to keep their family home and rent it out. Rent received is relatively high now, which can help with the purchase of a new smaller property or provide retirement income. Rents for an average 3/2 property are now typically well over $3,000 per month.

Another similar trend is when parents pass, children would typically have their parents home sold. But children are now more often holding on to their parent’s home and renting it out for income. In economics, there is something referred to as price expectations theory. When suppliers expect prices to increase in the near term, supply tends to be held back in anticipation of receiving higher prices later. This is what is happening in real estate. As inflation continues to surge and property prices continue to steadily appreciate, property owners are holding on to properties instead of selling. Another consideration would be deciding where to place the funds from the sale. With the stock market at an all-time high, and equity valuations elevated, many prefer to hold wealth in the form of real estate. Although some tax relief is available ($500,000 tax-free gains for primary properties of married couples, seek advice from tax experts), with prices so high, there may still be a large tax liability with the sale of a home, again causing some homeowners to hold on to a property rather than selling it.

This leads to another trend; property management companies are experiencing record business and growth. As a note, I own several rental properties and recommend professional property management for rental properties, as regulatory bureaucracy is high and tenant evictions, if needed, can be tricky. Property managers carefully scrutinize potential tenants (extensive background checks, etc.) and have tenants set up on rent payment apps so that rents are paid seamlessly through direct deposit. Gone are the days of knocking on doors for rent checks.

This all leads to very little inventory in the marketplace. I held an open house for a new listing last weekend in Carlsbad and we were absolutely overrun with potential buyers coming through for a $1.6m fixer. With minimal inventory turning over, the population of renters will continue to rise in San Diego County. I read recently that we are slowly becoming a renter’s nation, with the majority of Americans having to rent, and less people owning properties. Another trend is that there are less flippers in the market. Desperate buyers are outbidding flippers to win a property and then improving the property themselves. If you have any questions on buying or selling real estate here in San Diego, please call me for a no obligation chat or meet-up!

MARKET REPORT:

Median single-family home price in 92115 is way up to $1,110,000 with 29 new listings in the month of February. 92119 also saw a large increase in median single-family home price which hit $1,162,000 with 12 new listings in February. 92120 single-family homes had a median price of $1,006,000 with 25 new listings. We have seen the number of new listings pretty much double from January to February. Despite an influx of inventory, prices are still way up and buyer demand continues to exceed supply.