2022 Q2 Market Report
July 1, 2022
The market saw a sharp decline in dollar volumes in every price point above $300k USD. A dollar volume decline of 40% versus a unit volume decline of only 20% put average sales prices into decline. Much of the current state of the market is due to persistent low physical inventory. Demand remains strong with Days on Market continuing its downward decline. Price increases are appearing with sellers testing the outer bounds of the market.
Inventory remains low near half of where it was in Q1 2020 but it has rebounded slightly from 2022 Q1. Inventory makeup has also turned a new corner where pre-construction inventory (430 units) on MLS now exceeds physical inventory (387 units).
Los Cabos Market Expectations vs America
Many clients are asking about price direction in Los Cabos amid rising interest rates and slowing markets in America. We see demand remaining strong in Los Cabos and prices are holding. In America we understand the same can also be said. We subscribe to a newsletter called “The Blueprint” authored by James Harris and David Parnes of Million Dollar Listing Los Angeles fame. In the June 21, 2022 issue of The Blueprint they summarized a recent report from the Chief Economist of the National Association of Realtors about real estate in America:
2. Expect inventory to keep lagging demand. According to Freddie Mac, we’re still short about 3,000,000 homes. Only about 1,200,000 are expected to be built next year, so it’s going to take a while to catch up.
3. Prices aren’t coming down. Between high inflation and low inventory, there’s little room for prices to fall this year. If your buyers are waiting to snag a good deal, they will likely be waiting a while.
As agents in Los Cabos we are seeing pretty much the same. Lack of physical inventory is the number one reason sales are lower this quarter. It will be some time before new construction is complete and more physical inventory is available.