Flood of prospective buyers struggle to find North County homes

ENCINITAS 一 North County San Diego and Encinitas have seen an influx of prospective homebuyers since the pandemic struck last spring.

Many people are working remotely as a result of the pandemic, which gives professionals a greater sense of freedom when it comes to choosing where they want to live.

And that is exactly what inspired Susan B. to move to the area.

Susan and her family have lived in Pasadena since 2012 because of work, but she and her husband have always loved Encinitas. Their son was born in San Diego and they adore the small-town feel and good schools North County has to offer.

When their work went remote last year, they decided to start looking for a home in North County but quickly became overwhelmed by the market. Every home they looked at had dozens of offers on it.

Buyers were competing with one another for the limited housing inventory, practically catapulting money and ludicrous offers at sellers in hopes of securing a home in Encinitas.

“We looked at 20 plus places. We had looked all along the San Diego coast all the way to Chula Vista and across to San Marcos and Scripps Ranch,” Susan said. “If it was Monday or Tuesday, by Friday it was pending already.”

Tyson Lund started working for the Lund Team, his parents’ real estate business, back in 2003. The housing market in North County and Encinitas traditionally has an ebb and flow, spring marks the beginning of the house-hunting season, which carries on through the summer before slowing in the fall.

The housing market briefly hit pause when the pandemic struck last year, but then began to accelerate as mortgage rates hit historic lows. Overall, home values in the area have risen 13% in the last year and forecasts predict the trend to continue for at least the next 12 months.

People rushed to take advantage of the market, but the market had become buyer-saturated — everyone wanted a home, but there were very few up for grabs. As a result, prospective buyers had to dig deep.

“Homebuyers became much more aggressive in their offers.  Many of the home buyers in the market had already unsuccessfully (made) offered on homes,” Lund said. “Even after offering 3 to 5% above asking, they were not chosen. The results started to show that winning bids were as much as 10% over the asking price.”

Lund said many brokers were seeing buyers from Los Angeles, New York and the San Francisco Bay Area. By comparison, Encinitas is an affordable place to live. Homeowners get more for their dollar down here.

Out-of-state buyers coupled with locals searching for a home have driven prices up well over the asking price, which sometimes translates to hundreds of thousands of dollars.

“If someone has missed out on six other homes, and this home has something they really like, they often are willing to pay substantially more than comparable sales,” Lund said.

Susan and her family were no different. They had made multiple offers on million-dollar homes, only to be blown out of the water by other offers.

“It’s discouraging going through the process. We just moved on and went on to the next house,” she said. “You just have to keep with the faith and not go overboard. The hardest thing is to be patient.”

Lund said the seller’s market is expected to continue until something changes. Homeowners will either capitalize on the market, put their house up for sale and create more inventory, or unsuccessful buyers will fatigue and toss in the towel, reducing the demand for housing.

Either scenario would lead to a better-balanced market.

“The current price appreciation is unprecedented and is challenging housing affordability,” Lund said. “I would expect that the pace of appreciation and over-bidding to slow as this year moves forward.”

Susan and her family finally secured a home in Carlsbad. They were unable to get into something in Encinitas, but their future home in Carlsbad has a yard for their son and is close to both the beach and quality schools.

Like other homebuyers, Susan and her husband debate dropping out of the race and waiting for the market to level out. In the end, they decided the quality of life the area provides was worth paying top dollar for.

“We thought the timing was right, even though we are paying the premium,” she said. “There’s never a right time, it just has to be important to you. You have to find the house that’s good for you and your family and grab it.”