The 3rd quarter started with trepidation over new real estate laws going into effect, but we soon forgot about that and got back to business with relatively minor changes. With rates dropping, there was wind behind the sails filled with hope and remembrance of better times… Here’s the stats for San Diego real estate from the 3rd quarter of 2024, along with predictions for the rest of the year. Always hand-written with stats direct from our local MLS.
2024 Q3 Summary
Sales Volume Up: Q3 2024 had 3.7% MORE closed sales than Q3 2023.
Inventory Rising: Level throughout Q3. Ended Q3 Up 48.7% from Q3 2023.
Loan Rates DROP: Started Q3 at 7.14%. Ended Q3 at 6.24%
Home Values Seasonal: Median price went from $950k to $895k in Q3. Up 3.8% from Q3 2023
Govt./Policy Changes: Fed Fund Rate dropped 0.5 in Q3
Rental Rates Down: Median Rents lost ~1% in Q3 to end down 2.1% from Q3 2023
The Above image is a visual summary of my statistics reference from our local San Diego Association of Realtors.
Click here to View Full Stats from San Diego Association of Realtors
2024 Q3 – Rates Start Dropping…
Sales Volume:
Sales Volume dropped 45% from 2021 through 2023. While we are up 1.4% in 2024 over 2023 thus far, this tiny increase pales in comparison to the decreases experienced during and after the loan rate increases. Higher home loan rates + higher prices = Lower Sales. But rates started to fall in Q3 and we had a decent amount of sales activity as a result. Here’s a great historic chart for sales volume:
Inventory:
Inventory has been low for years, but it has been rising in 2024. New listings account for much of this, up 22% over last year at this time. Sales have remained steady, but are not strong enough to eat up the extra inventory. We are currently up 48% with our listing inventory right now over the same month last year.
I’ve also noticed that attached/condo inventory has been on the rise more so than detached homes. There is a higher percentage of new attached listings on the market this year than detached homes. As such, the inventory gains of attached are higher (71%) than detached (37%).
Loan Rates:
Home loan rates rose steadily most of 2023 and peaked in mid-October at just over 8% before they dropped pretty quickly towards the end of the year. The 30-year fixed MND rate average started 2024 at 6.72% and rose steadily in the first half of the year. Then in the 3rd quarter, after inflation has continued to subside and certain economic indices showed weakness, the Fed signaled an upcoming rate cut and the market responded. Rates dropped almost a full point to end Q3 at 6.24%. However, in the opening stages of Q4, rates jumped super fast again and are currently sitting at 7.02% on 10/30/24.
Will rates come down again soon? I think so. We will get another drop of the Federal Funds rate before end of Q4 and will likely be in the mid 6’s by the end of the year.
Home loan rate charts:
Long Term Rate Chart: 1971 – 2024 Short Term Rate Chart: 10/2023 – 10/2024
Govt / Policy Changes:
For the first time in years, The Fed dropped it’s benchmark rate from 5.5% to 5.0%. This was much anticipated by the lending industry which started dropping home loan rates early in Q3 despite the Fed drop happening on 9/18. Many expect the Fed to do one more drop in Q4, but that also depends on what economic news is received leading up to the next Fed meeting. If there is “bad” economic news and/or lower inflation, we are sure to see a drop and potentially another 2 points, but “good” economic news and/or higher inflation will cause the Fed to hold off on further drops. I’m expecting enough bad news for a single point drop of .25 in Q4.
Home Values:
Home Values went up in spurts in 2024. Prices peaked in April 2024 with a new median home value high for detached homes of $1,090,000. Home values stayed steady for 2 months before they dipped to $1,050,000 at the beginning of Q3 and stayed at that level til now.
As noted above, there was a big separation between attached vs detached housing when it came to inventory in Q3. Not surprisingly, the added condo inventory resulted in condo prices taking a bashing in Q3, while detached home values stayed level. Median condo prices ended Q3 down 2.1% over Q3 of the previous year. This is the first year over year decline in median values that I’ve seen in a loooooong time. I do believe it’s an early signal of what’s to come.
Rental Prices:
As most of you know, I’ve been building a property management business the last few years. I am currently managing 7 units and seeking more. Please think of me the next time you or someone you know wants to rent their home/condo. I consistently pay for myself by minimizing vacancies.
Rental rates saw their first decline in a decade in 2023. Q4 of 2023 was brutal and prices dipped hard. So far this year, we are at a modest 1.4% gain but the fourth quarter always disappoints a landlord with a vacancy. Year over year, we are down 2.1% right now and 1% off the high from the summer.
Median Rents – Last 12 months Median Rents SD: 2019-Present Median Rents: 2005-2019
What does the future hold? My theories & predictions are below…
Of course, these are just predictions….that said, I think that our market is heading for a quiet winter. With rates having jumped up so much so fast coupled with the election and holidays, I just don’t expect many people will be buying (or selling). I expect 1 more rate drop from the Fed this year, which will likely be precipitated by “bad” economic news/data. As such, I think the recent run up on home loan rates that is happening in October will slowly edge it’s way back down into the 6.5% range.
I’m expecting a continued slide for equity which I suspect has already been happening and will be seen in the stats at year’s end. I’m expecting low demand and low sales numbers, too. Inventory will drop as a seasonal norm, rather than from any increase in sales – we will likely start 2025 with 50% more inventory than we did this year. I believe the economy/jobs will remain relatively stable which will give us just enough demand to keep home prices from falling quickly. If rates start to drop a little at the year’s end as I expect they will, we may see one last ‘flurry’ of activity to finish off 2024.
Rents slid down quite a bit at the end of 2023 to end the year down. This year, they have been relatively consistent and moving within Seasonal norms. Thus, I am expecting rental rates to drop slowly in Q4 to end the year just about where we started it or down up to 1%.
Want a free lunch?
Send me a referral that buys/sells/rents and I will buy you lunch every month for the next year in person to say thank you!
I have always appreciated your referrals – they have been the foundation of my business.
Adam Pascu
Broker / Owner
73 Degrees Realty
858-761-1707
ps. feel free to check out my San Diego Green Homes site if you have a passion for living green/sustainably and contact me (cell: 858-761-1707) for a free consult regarding how to green your home.