Supply and Demand in San Diego

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San Diego County Housing Report: Bidding War February 9, 2021- When a home hits the market, it is greeted with throngs of buyers and so many offers to purchase that a bidding war ensues. 

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Multiple Offers
It is not uncommon for homes marketed FOR-SALE to procure 5, 10, 15, or even more offers to purchase within a few days of coming on the market.
 
Charity auctions can be very entertaining. There is always something that nearly everyone wants. An Italian villa, a gourmet chef for a week, a ski chateau in the Rocky Mountains, all garner plenty of attention. After scouring all the details, attendees strategize and settle on their maximum bids. The auctioneer starts the bidding low to capture everyone’s attention. Paddles are eagerly raised one after the other. There is so much interest that the auction transforms into a bidding war. The value soars upward until it finally slows, and a winning bidder is revealed. The final price is typically a lot more than many of the bidders were originally willing to pay.
 
That in essence is what is occurring daily in the real estate trenches. Homes that hit the market are instantly greeted with plenty of buyer interest and a stream of showings. In no time multiple offers follow. Buyers are pitted against each other and a bidding war develops. Countless buyers offer the full asking price, only to receive a counteroffer that asks them to come back with their highest and best offer to purchase. Yes, in many cases that means that a buyer must be willing to pay higher than the asking price to be the winning bidder. Many homes ultimately sell for more than their asking prices. 
 
There are a lot of reasons the market is exceptionally hot today. The leading factor is record-low mortgage rates. The monthly and annual payment savings are jaw-dropping and has been the catalyst to a tsunami of buyer interest. Another factor is the lack of available homes to purchase. There are fewer homes coming on the market right now because it is still the Winter Market. The vast majority of homeowners opt to “wait until the spring” to market their homes. Spring does not begin until Saturday, March 20^th. Until then, there should not be the expectation of a bunch of new homes hitting the market. With demand so hot, many homes are not available to purchase because they are in escrow. With more escrow activity, the supply diminishes. Also, fewer homes came on the market in January compared to the 5-year average, 24% less, or 1,028 missing FOR-SALE signs. That is a lot of homes for a housing market starved for fresh inventory.
 
In breaking down the inventory by price range, the lack of available homes to purchase is fairly uniform across the board. There are 2,296 fewer homes on the market compared to last year. In fact, the current inventory is at 2,355 homes... Click here for the full report
 

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