What The Shortage Of Homes For Sale Means To You

San Diego is in the midst of a BIG home inventory shortage right now, so I wanted to write up a post about what exactly that means for home shortage of homes for sale in san diegobuyers vs. home sellers, and how you can win in either position.

According to the San Diego Association of Realtors, from May 2015 to May 2016, the number of homes for sale went from 8,147 to 6,542 (a 20% decline, approximately). This reduced the months supply from 2.8 months to only 2.1 months, a 25% drop during the same period. This has a number of implications for both buyers and sellers, which I’ll break down below:




A home shortage can make buyers very frustrated. They may feel like they are having a hard time finding a home to purchase in their price point since it drives prices up.  This is because limited inventory means fewer houses for qualified buyers to offer on, often resulting in multiple offers and higher prices (and sometimes out of the buyer’s budget).  In order to come out ahead, buyers should get pre-approved (not just pre-qualified) BEFORE starting the house hunt.  When a buyer does find the perfect home, if they are not pre-approved, that will delay his ability to offer on a house by a couple of days (or more). It will likely already be in escrow by the time they have the pre-approval letter in hand.

Also, rather than starting with a lowball offer, come in with an aggressive first offer to show you are serious about the property. While the strategy of a lower offer can work in a buyers market, you are at a huge disadvantage in today’s environment. The exception to this would be if your Realtor advises that the home is significantly overpriced.  One final way buyers can win in this market is to get CREATIVE!  Have your Realtor try to find out if there are any special terms the sellers are looking for, such as a long Escrow (or very short Escrow), rent-back period, willingness to keep current tenants in place until their lease is up, etc.



As a seller, overall, you will benefit from the inventory shortage.  As mentioned above, limited inventory often means multiple offers for you.  It is important to have your Realtor carefully explain the pros and cons of each offer received so you can make a great decision about which offer to move forward with.  One thing to note is that if you are selling AND buying, you will face the same challenges on the “buy side” as other buyers.  One way to remedy this is by making the sale of your home contingent upon the purchase of a new property.  That way, if you do face road blocks or difficulties on the buy side, you have a way out of selling your current home.

San Diego housing inventory levels

This graph shows the number of active listings in San Diego from 2013-2016.  You’ll note how much the inventory has declined throughout these three years.


It is possible for both buyers and especially sellers to have great success in San Diego’s home shortage.  However, it helps to know the state of the market in order to figure out how to best position yourself to get the most for your money (or the most for your property).  Let me know if you have any questions about the San Diego real estate market and I’ll be happy to help!

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