Here’s why our San Diego market will stay strong in 2021.
Trying to predict the market for next year is a fool’s game. “Strong” is relative to individual market segments and pockets of each county. That said, there are five key indicators that tell us our San Diego market will almost certainly stay strong next year:
1. Low inventory. I don’t want to sound like a broken record, because this has been a talking point for years now. We all know inventory in San Diego is low, but there are certain facts you need to know to put this trend into context. Between 2010 and 2019, the number of building permits issued and houses constructed fell 48% short of what was projected. On top of that, resale inventory here in San Diego County is at less than a three-month supply. Therefore, it’s safe to assume inventory will stay low in 2021.
2. Money is cheap right now. We all know that interest rates have been one of the driving factors of our strong market, and the Federal Reserve (which indirectly influences mortgage rates) has pledged to keep their rate near 0% until 2023.
3. The national unemployment rate is declining. Between May and September, it’s decreased from 15% to 9%.
“While a small portion of the homes in forbearance will end up in foreclosure, nobody expects a huge wave à la 2008.”
4. The prospect of a COVID vaccine. An available vaccine would encourage more at-risk individuals to venture out into the market and spend money. This, in turn, would boost job growth and inject more money into our city.
5. Most of the homes that are in forbearance have a lot of equity. This makes our current situation different from the one that preceded that last housing market crash in 2008. Furthermore, there are plenty of repayment options homeowners in forbearance can choose from. While a small portion of the homes in forbearance will end up in foreclosure, nobody expects a huge wave à la 2008.
If you’d like to know more about the future prospects of our San Diego real estate market or have any questions I can answer, don’t hesitate to reach out to me. I’d love to hear from you.