Through the month of September the residential real estate market in San Diego has remained strong with multiple offers on many homes. There are, however, the beginnings of the signs of seasonal cooling that we usually have in the fall and it is affecting both our pricing and negotiating strategies with our sellers.
Detached single-family home prices are at a new high both in absolute terms and as measured on a price per square foot basis.
In order to best advise our clients, whether they are buying or selling, we follow a number of metrics as leading indicators of home prices. These include months of inventory of homes and days on market. Days on market measures how long the typical home is on the market before it goes under contract with a buyer.
Over the last 6 years there have been two trends that can be observed in a chart of days on market. The first is that days on market increases in the fall and winter. This is normal seasonal trend although it has serious implications on how we advise our clients depending upon our client’s goals. The second larger trend is that days on market have been trending down over time. This reflects the environment of tightening inventory.
Generally when either months of inventory or days on market of homes are rising, it indicates future softening of prices. Through September days on market has began to turn up but inventory has remained flat.