Luxury home sales in San Diego have dropped by more than half as the high-end market experiences its biggest decline in at least a decade.
Of the 50 most populous metro areas, San Diego had the fourth-highest decline in luxury sales from June to August, said a Redfin report released Thursday. The number of sales fell 55.3 percent compared to the same time last year.
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The markets with the biggest declines were Oakland (down 63.9 percent), San Jose (down 59.6 percent) and Miami (down 55.5 percent). The lowest declines were in Kansas City (down 10.4 percent) and Indianapolis (down 7.5 percent).
Redfin defined luxury homes as the top 5 percent of the highest priced homes for sale. So what is considered luxury was very different across metro areas. For example, the median price for a luxury home in Cleveland was $629,000 compared to $3.3 million in metro San Diego (which includes all of San Diego County).
Rising mortgage interest rates are cited as the main reason why the entire housing market is slowing down. Redfin also said economic uncertainty and a tepid stock market also dampened sales.
Redfin chief economist Daryl Fairweather wrote in the report that luxury buyers are more likely to pay cash for homes, but some are using mortgages as an investment strategy. The thinking is that even if the buyer could pay cash, taking advantage of low interest rates to finance a multi-million dollar home allows a wealthy buyer to use other funds in the stock market or for another investment.
However, Fairweather wrote that higher interest rates cut into that strategy.
“Someone who was in the market for a $1.5 million house last year may now have a maximum budget of $800,000 thanks to higher mortgage rates,” she wrote. “Luxuries are often the first to be cut when uncertain times force people to reassess their finances.”
The survey used a three-month average ending Aug. 31, so it captured the summer when the stock market was hit hard and there was growing concern about the global economy. Redfin said national sales of luxury homes fell 28.1 percent annually, the biggest drop ever since it began keeping records in 2012. That surpassed the 23.2 percent drop at the start of the pandemic, when there was an initial escape from real estate.
A red-hot housing market for much of the pandemic still means luxury homes are more expensive than they were a year ago. The median price for a luxury home in San Diego, $3.3 million, was up 23.6 percent from last year. That compares to the general San Diego market, with an average sales price of $860,000, up 16.2 percent in a year, Redfin said.
It’s not just wealthy buyers who are leery of the housing market – it’s potential sellers too. The number of luxury homes in San Diego County fell 32.9 percent from June to August, Redfin said. Oakland had the biggest drop at 40.7 percent.
San Diego luxury real estate agent Brett Dickinson, with Compass, said a lot of potential sellers own their homes outright and are doing well enough that they don’t feel pressured to put their homes on the market right now.
“Economically, it doesn’t make sense for them,” he said. “They’re taking a wait-and-see approach.”
Discounts at the luxury level tend to be quite steep. Here are a few examples:
Dickinson’s view was that the luxury market was fine and returning to normal after a particularly frenzied pandemic buying season. For example, he said there were about 45 single-family homes for sale in La Jolla about two months ago, but there are now about 90. Dickinson said it’s easy to be fooled by inventory shooting up, but that ignores that there are usually about 150 to 200 homes for sale around this time.
He argued that San Diego’s luxury market was better positioned to weather the storm than other markets because of tech companies like Apple increasing their footprint here, as well as the strong biotech industry.
Biggest luxury home sale drops by metro
Year-over-year comparison of Redfin from June to August
San Francisco: Down 49.6 percent
Is San Diego a nice place to live?
With some of the best weather, food, schools and beaches in the world, San Diego is one of the best places to live in the entire country. Living in San Diego, known for its high quality of life and relaxed atmosphere, is often considered better than living in Los Angeles.
Why is San Diego so popular? San Diego is known for its idyllic climate, 70 miles of pristine beaches and a dazzling array of world-class family attractions. Popular attractions include the world famous San Diego Zoo and San Diego Zoo Safari Park, SeaWorld San Diego and LEGOLAND California.
Is San Diego a friendly city?
SAN DIEGO (KGTV) â America’s Finest City is also considered America’s friendliest city, according to a recent survey by OfferUp. San Diego ranked first on the list of friendliest cities in the US with 80% of users of the mobile marketplace app, said OfferUp’s 2019 Good Neighbor Report.
Why do people like San Diego?
San Diego should be on your bucket list. With spectacular weather, outdoor culture, great shopping, and food so beautiful you’ll want to spend as much time Instagramming it as eating it, this Southern California city perfectly embodies the cool Cali vibe we all love.
Is San Diego a fun city to live in?
SAN DIEGO (KGTV) âU.S. News and World Report has confirmed what many San Diegans already know. America’s Finest City is the funnest place to live in the United States. According to the rankings released at the end of October, San Diego takes first place on the list thanks to its restaurants, parks and natural beauty.
Is San Diego safe to move to?
Statistics show that San Diego’s crime rate is lower than the national average and is one of the safest big cities in the country. The latest report from SANDAG describes San Diego as an overall low-risk city in terms of crime.
What are the downsides of San Diego?
Disadvantages
- Cost of living. San Diego is not the cheapest place to live! …
- Sport. If you’re a big sports fan, San Diego might not be the perfect city for you. …
- Lack of seasons. For some this might be a pro, but for others the lack of seasons might be a little boring. …
- History. …
- Traffic.
Is San Diego California a safe place to live?
Despite the fact that there are some neighborhoods that have higher crime rates, when you ask “is it safe to go to San Diego?” The answer is of course yes. San Diego has a crime rate that is 15 percent lower than the national average. It is safer than 34 percent of all cities in the country.
Will house prices drop in 2023 Ireland?
Irish housing market predictions for 2022, 2023 and beyond “The possibility of a modest decline in Irish house prices cannot be ruled out, correcting some of the froth that has built up since the start of the pandemic. Double-digit decline or a repeat of the Celtic tiger’s housing crash, however, seems highly unlikely.”
Will home prices drop in 2022 California?
According to the California Assn. by realtors, home prices nationwide and in Southern California are likely to decline about 7% in 2023 compared to 2022, in part because mortgage rates are expected to remain high.
Is 2022 a good time to buy a house in California? And with everything going on with the US economy (inflation, interest rate hikes, etc.), interest rates could rise further over the coming months. Bottom line: From an investment and market conditions standpoint, 2022 is still a great time to buy a home in the Bay Area.
Will US home prices drop in 2023?
Goldman Sachs predicts that US home prices will rise 1.8% in 2023 and 3.5% in 2024. Meanwhile, firms such as the Mortgage Bankers Association, CoreLogic, Fannie Mae and Freddie Mac all still predict low single-digit home price jumps in 2023.
Will House Prices Drop In USA 2022?
While wages grew 5.2% in July compared to the same time last year, they still lagged behind the 8.5% rise in inflation. MBA economists also don’t see house prices falling in the near future. They forecast a 9.9% annual increase in prices in 2022 compared to 2021 and a 3.1% increase in 2023.
Will US housing prices ever drop?
Zelman’s forecasting model predicts that by 2023 US home prices will fall 4%. So in 2024, she predicts another 5% drop. “As quickly as [inventory levels] rise and demand plummets, we could see pretty significant price corrections for [housing]. But it will vary from market to market, says Zelman.
What will happen to house prices in 2022?
Further interest rate increases are expected throughout 2022, which could dampen the housing market because it means mortgage repayments will rise. The cost of living crisis is likely to be the biggest cause of a slowdown in the housing market.