Data: C.A.R.'s December Resale Report
The San Diego Real Estate Market is Slowing
As the San Diego housing market settles into a steady rhythm, it seems that the frenzied pace of price increases and home sales will continue to slow. While the market may not be as white-hot as it was during the pandemic, it's unlikely that we'll see any drastic drops in prices in 2023. The underlying forces of supply and demand still favor a pricey market like San Diego, and though the rate of growth may be decelerating, home prices continue to climb.
There are several factors that contribute to the hot housing market in San Diego. San Diego has a strong and diverse economy, anchored by industries such as healthcare, defense, and technology. The strong job market in the region helps to attract new residents and supports the demand for housing. San Diego is a popular destination for retirees, and its population is growing, which is a driver for housing demand.
Additionally, the increasing population of millennials in the area is also driving demand for housing. San Diego has a limited supply of housing, which can drive up prices. The housing market is considered to be a “seller's market” with high demand and a limited supply of homes. San Diego has a Mediterranean climate, with mild winters and warm summers, which attracts many people who are looking for a place to live with comfortable weather. This demand for housing helps to drive up housing prices in the region.
Because mortgage financing has gotten more expensive as the Federal Reserve raises interest rates, record home price increases may not last much longer. Despite a still-strong housing market, rising mortgage rates are plainly making it more difficult to buy in a market that already has some of the highest prices in the country. Higher interest rates are rapidly driving buyers out of the San Diego housing market.
The hot seller's market has slowed down, with prices to follow through 2023 as inventory increases and homebuyers opt to wait out the declining market. Expect sales volume and prices to fall between 1 to 5% if a recession occurs, which is anticipated in the second half of 2023. The good news is that if we do face a recession, most experts believe it will be mild.
According to the latest C.A.R. report, the median single-family home price in San Diego County increased by 1.6 percent to $850,000, while sales fell 43.2 percent year over year. December's median price was 1.7% lower than November's median price of $865,000. Inventory is still low and thus prices are rising as compared to last year in the San Diego housing market.
- The median price of a one-bedroom house in San Diego County is $472K.
- The median price of a two-bedroom house in San Diego County is $675K.
- The median price of a three-bedroom house in San Diego County is $800K.
- The median price of a four-bedroom house in San Diego County is $1.27M.
The average sale-to-list price ratio, which measures how close homes are selling to their final asking prices, was 96.2 percent in December. Last year in December the same ratio was 101.4%. Homes are still selling in San Diego more quickly than the national average. Nationally, properties typically remained on the market for 26 days in December. Homes sold in a median of 20 days in San Diego, up from 12 days compared to last year.
The housing demand in San Diego has also been driven by the desire for additional space as people spend more time at home. Housing prices in San Diego County have risen dramatically in the past year due to lower mortgage rates which allow buyers to put more of their monthly payments toward the principal. The record-low interest rates in 2021 fueled San Diego's high house prices, increasing consumer purchasing power. Higher interest rates are leveling buying power and reducing homebuyer urgency.
Will Home Prices Drop in San Diego?
San Diego County's median home price decreased by 1.7% from last month to $850,000. It is a growth of 1.6% over last year, according to C.A.R.'s resale housing report. The report also shows that existing single-family home sales also declined by -43.2% YTY but improved a bit, by 0.8% MTM. San Deigo's condo market saw a decrease in the median price as compared to last year. The condo's median price was $575,000, down +3.7% MTM and -0.5% YTY. Last year at this time the median condo price in San Deigo was $578,170.
Months Supply of existing single-family homes is currently holding at 2.2 months while for condos it is 2.4 months. It is a good indicator of whether a particular real estate market is favoring buyers or sellers. Typically, a market is considered balanced if it has 4 to 6 months of inventory of homes on hand. A lower number means that buyers are dominating the San Diego housing market and there are relatively few sellers.
According to a survey, San Diego has the nation's most costly housing market. That is not to say we have the most costly residences. San Diego edged out San Francisco as the least cheap city in which to buy a property. This is because earnings in San Diego have not kept pace with increasing house prices. San Diego County covers an area of 4,526 square miles making it larger than Delaware or Rhode Island and 82% the size of the state of Connecticut.
The San Diego housing market is cooling off. Numerous home market analysts link the cooling to the housing cycle as well as unusual conditions such as a hot market during the prior pandemic. Rising interest rates are among the primary causes of the cooling housing market. To combat inflation, the Federal Reserve has been increasing interest rates. These interest rate increases prompted lenders to increase mortgage rates, so affecting affordability.
Housing analysts believe that San Diego's housing market will heat up again in the future because of increased demand from the military, tourists, and a large influx from the tech industry. Despite the cooling, San Diego County remains a seller's market, according to the most current Realtor.com statistics. In other words, there are more buyers than houses for sale on the market.
Home Prices in San Diego County, CA
The following San Diego housing market trends are based on single-family, condo, and townhome properties listed for sale on realtor.com. Land, multi-unit, and other property types are excluded. This data is provided as an informational resource only.
- In December 2022, the median list price of homes in San Diego County was $849.9K, trending up 7.7% year-over-year.
- The median listing home price per square foot was $540.
- The median sale price of homes was even higher at $762.6K.
- Homes in San Diego County, CA sold for 1.05% below the asking price on average.
- It is a seller's market as the total sales to total listings ratio is above 0.2 which tends to favor sellers.
- It also means that more people are looking to buy than there are homes available.
- There are 67 cities in San Diego County.
- La Jolla has a median listing home price of $2.4M, making it the most expensive city in San Diego County.
- Spring Valley is the most affordable city in San Diego County, with a median listing home price of $699K.
Home Prices in San Diego City, CA
- San Diego City is an even more expensive housing market.
- The median listing home price in San Diego City was $899K, trending up 7% year-over-year.
- The median home sold price was $780K.
- San Diego, CA is also a seller's market which means that more people are looking to buy than there are homes available.
- Homes in San Diego, CA sold for 0.96% below the asking price on average in November.
- On average, homes in San Diego sell after 53 days on the market.
- Currently, City Heights is the most affordable neighborhood in San Diego, with a median listing home price of more than half a million dollars ($575K).
Is it a good time to buy a house in San Diego?
Mortgage rates are rising compared to last year. In December 2022, the 30-Year Fixed-Rate was 6.36% while in December 2021, it was 3.10%. The supply is still low and with all of these factors considered, at this time, it is unlikely that the San Diego housing market will see any major price decline in 2022 or 2023. Here's how much buyers would need to pay for housing in San Diego County (source: CAR).
- The median price of a one-bedroom house in San Diego County is $472K. If you put 20% down, the monthly payment = $2,899.
- The median price of a two-bedroom house is $675K. If you put 20% down, the monthly payment = $4,141.
- The median price of a three-bedroom house is $800K. If you put 20% down, the monthly payment = $4,908.
- The median price of a four-bedroom house is $1.27M. If you put 20% down, the monthly payment = $7,822.
San Diego Housing Market Forecast 2023
What are the San Diego real estate market predictions for 2023? Let us look at the price trends recorded by Zillow (a real estate database company) over the past few years. The typical value of homes in San Diego County is currently $874,095. It indicates that 50 percent of all housing stock in the area is worth more than $874,095 and 50 percent is worth less (adjusting for seasonal fluctuations).
San Diego County's home values have gone up 6% over the past year — ZILLOW HOME VALUE INDEX. ZHVI represents the whole housing stock and not just the homes that list or sell in a given month. San Diego County also comprises the San Diego-Chula Vista-Carlsbad, CA Metropolitan Statistical Area, which is the 17th most populous metropolitan statistical area. The San Diego-Carlsbad, CA Metropolitan Statistical Area is conterminous with San Diego County in Southern California.
According to Zillow, the typical value of homes in the San Diego-Carlsbad Metro is $874,095. The rate of appreciation will be much less than what we have seen in the last year when the mortgage rates were lower than 3%. The forecast for 2023 is that the higher mortgage rates will continue to dampen the demand and decrease home prices.
- San Diego-Carlsbad Metro home values have gone up 6% over the past year.
- Zillow predicts a home price decline of 2% between December 2022 to December 2023 in this metro region.
San Diego Real Estate Appreciation Rates
San Diego is in the top 20% nationally for real estate appreciation. NeighborhoodScout.com's data also shows that in the past ten years, San Diego real estate appreciated by 124.96%. This amounts to an annual real estate appreciation of 8.45%. During the twelve months (2021 Q2 – 2022 Q2), San Diego's appreciation rate has been around 15.83%, slightly above the national average. From 2022 Q1 to 2022 Q2, the appreciation rate has been 3.98%, which annualizes to a rate of 16.89%. Overall, there exists a limited supply of homes in San Diego, and buyers are forced to compete often resulting in higher prices and/or quicker sales that tend to benefit sellers.
In a balanced real estate market, it would take about five to six months for the supply to dwindle to zero. In terms of months of supply, San Diego can become a buyer’s real estate market if the supply increases to more than five months of inventory. This housing market is normally skewed to sellers due to a persistent imbalance in supply and demand. This is also true across much of Southern California.
The chart below, created by Zillow, shows the growth of median home values.

Greater San Diego Housing Market Report
In the Greater San Diego region, the decline in existing home sales coincides with rising home prices, which continued to gain last month, with the median sales price of single family homes up 3.4% compared to last year, according to the Greater San Diego Association of REALTORS®. The median sales price reached $885,000 for detached homes in the Greater San Diego housing market.
The percentage change is shown year-over-year for November 2022.
- The Median Sales Price was up 2.3 percent to $869,900 for Detached homes but decreased 0.8 percent to $585,000 for Attached homes.
- Closed Sales decreased 46.2 percent for Detached homes and 53.9 percent for Attached homes.
- Pending Sales decreased 30.0 percent for Detached homes and 35.9 percent for Attached homes.
- Inventory increased 48.6 percent for Detached homes and 63.9 percent for Attached homes.
- Days on Market increased 60.9 percent for Detached homes and 95.2 percent for Attached homes.
- Supply increased 116.7 percent for Detached homes and 120.0 percent for Attached homes.

The San Diego real estate market has been ranked among the ten most expensive real estate markets in the country, though it ranks below several other West Coast cities. This creates massive demand for San Diego rental properties by those who simply cannot afford to buy homes. The rental market will continue to grow as the city grows an estimated 500,000 population by 2050, adding tens of thousands each year. The median rent in San Diego is $2700. The rent you’d receive on single-family San Diego rental properties would, of course, be much higher.
If you find a good bargain and make it family-friendly, you could charge well over $3000 a month. If you can convert San Diego rental properties into smaller units, you’d receive around $2200 a month for a one or two-bedroom apartment. The cash on cash returns for properties in the San Diego housing market is around 2.5% for traditional rental properties and nearly 2% if you rent on Airbnb. The fact that the city isn’t too dependent on tourism means you could rent properties on the beach to newcomers, locals, and students if tourism is slow.
Before the pandemic, the average rent for an apartment in San Diego had been growing at 4% year-over-year (source: RentCafe). About 40% of the apartments can be rented for less than $2000, and 60% of the apartments can be rented for more than $2,000 per month. This shows that rent prices are very high in San Diego.
Homeowners vs Renters Statistics: According to the most recent 2020 American Community Survey census data, San Diego County has a renter percentage of 46.7% which is the second most renter percentage of all the counties in the greater San Diego County region. The homeowner percentage is 53.3%. The monthly cost of ownership for property owners in San Deigo is around $2,073.
The median gross rent is $1,658, which is the third most expensive among all other counties in the greater San Diego County region. Comparing rental rates to the United States average of $1,062, San Diego County is 56.1% larger. Also, compared to the state of California ($1,503), San Diego County is 10.3% larger.
San Diego Rent Market Trends & Prices
As of January 8, 2022, the average rent for a 1-bedroom apartment in San Diego, CA is $2,295. This is a 3% increase compared to the previous year. Over the past month, the average rent for a studio apartment in San Diego decreased by -7% to $1,799. The average rent for a 1-bedroom apartment decreased by -8% to $2,295, and the average rent for a 2-bedroom apartment decreased by -6% to $2,995.
- Two-bedroom apartment rents average $2,995 which is a 0% increase from last year.
- Three-bedroom apartment rents average $3,900 which is a 3% increase from last year.
- Four-bedroom apartment rents average $4,950 which is a 15% increase from last year.
Some of the information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
References
- https://www.car.org/
- https://www.car.org/marketdata/data/countysalesactivity
- https://www.sdar.com/press-releases.html
- https://www.zillow.com/SanDiego-ca/home-values
- https://www.neighborhoodscout.com/ca/san-diego/real-estate
- https://www.realtor.com/realestateandhomes-search/San-Diego_CA/overview
- https://www.sandiegorealestatehunter.com/blog/san-diego-real-estate-market-forecast
- http://www.homebuyinginstitute.com/news/san-diego-more-moderate-forecast
- https://www.zillow.com/research/2020-hot-markets-south-26293/
- https://journal.firsttuesday.us/san-diego-housing-indicators-2/29246/
- https://www.rentcafe.com/average-rent-market-trends/us/ca/san-diego