Is it a good time to buy a house in San Diego 2020? There could be a slump in the San Diego real estate market in 2020. However, with a strong economy and an increasing inventory of homes for sale, it could be a great time for home buyers. As of now, investing in the “San Diego real estate” seems to be the right investment decision.
Let’s get a comprehensive real estate market overview for San Deigo. Affordability has become an issue for many would-be homebuyers in the San Diego area. This is another housing market trend that is affecting many major cities across the country but particularly in the western coastal markets. According to a report by Zillow, San Diego is expected to be California’s hottest housing market in 2020.
However, nearly 29 percent of those surveyed said they believe San Diego home values will fall in 2020. During the 20 years from 1998 to 2018, the median home value in San Diego rose by a whopping 217%. But the median household income only rose by around 77% during that same 20-year time frame.
How big is San Deigo’s housing market? San Diego is a moderately walkable city in San Diego County with a population of approximately 1,305,700 people. It is the second biggest California city and one of the ten biggest cities in the country. San Diego is one of the fastest-growing cities in the U.S., too. San Diego is often overlooked in favor of hotter real estate markets like San Francisco and Los Angeles.
However, that’s one of the reasons why you should consider investing in the San Diego real estate market. The city of San Diego continues to outpace California’s job recovery, which is good news for San Diego’s housing industry. San Diego housing market 2020 remains one of the hottest in the nation (ranked 10th by Zillow).
San Diego real estate forecast shows big rent increases and strong home price growth. Since home building takes time especially in a heavily regulated environment, there’s little chance of diminished demand. The mortgage rates are continuing low and the number of renters is increasing. Rents in San Deigo are predicted to rise by 8.4%.
The San Diego real estate appreciation rate in the last quarter was around 1.2%, which amounts to an annual rate of 4.8%. However, it is quite unclear whether it would remain steady or not due to the short term effects of the ongoing pandemic. Economic uncertainty may hold back sales volume in 2020.
Some experts say that home prices may drop by 1 to 2% in the next 12 months. That would be a good thing for new homebuyers and investors as far as affordability is concerned as many of them can’t afford to buy a median-priced home in San Diego.
You can either choose to invest in your future or market your home to potential buyers. Let’s find out more about it. Please note that many variables can potentially impact the value of a home in San Diego (or any other market) and some of these variables are impossible to predict in advance.
San Diego Housing Market Trends & Statistics 2020
We shall now discuss some of the most recent housing trends in the San Diego area and compare it with the past couple of years. We shall mainly discuss median home prices, inventory, economy, growth, and neighborhoods, which will help you understand the way the local real estate market moves in this region. San Diego has been one of the hottest real estate markets in the country for many years.
San Deigo is currently a seller’s real estate market – which means that the demand from buyers is exceeding the current supply of homes for sale. The pricing of homes is trending higher and is more attractive for sellers in the current phase. The shortage of supply and an increase in the demand for housing will push the prices higher.
After volume and prices bottom in 2020-2021, homebuyers will return in greater numbers to push the housing market to its next boom, expected in 2022-2023.
The latest San Deigo Housing Market Report from the “California Association of Realtors” shows that inventory remained tight in March 2020 and more sellers lowered the asking price of their homes. In March 2020, San Deigo was a seller’s real estate market.
- Existing SFR sales in March 2020 were 589, down 5.5% from a year ago.
- Existing SFR Median Price was $840,000, up 16.7% from a year ago.
- Active Listings at the end of March 2020: 888, down 28.8% from a year ago.
- Median Days on Market: 9
- Sales-to-List Price Ratio: 100%
- Active Listings with price reduction: 24.7%
- Unsold Inventory Index: 2.4 (Seller’s Market)
The Median Sold Price of Existing Single-Family Homes in San Deigo County for March 2020 was $675,000, which is a year-over-year increase of 8.2%. Compared to the previous month, the median sold price increased by 0.7% and home sales increased by 23.4%.
On Movoto.com, San Diego’s current home resale inventory number is 1644, which has decreased by 37% from a year ago. The median list price per square foot in San Diego is $507. Distressed properties such as foreclosures and short sales remained the same as a percentage of the total market in May 2020.
| Today | 1 Month Ago | 1 Year Ago | |
| Active Inventory | 1,644 | 1,707-3% | 2,634-37% |
| Median List Price | $749,900 | $750,000 | $728,950+2% |
| % Distressed | 0% | 0% | 0% |
| Median Days on Movoto | 41 | 40+2% | 39+5% |
| Median Home Size | 1,468 | 1,460 | 1,521-3% |
| Median $/Sqft | 507 | 514-1% | 466+8% |
Market Snapshot Courtesy of Movoto.com
There has been some short term impact of Coronavirus pandemic on the Housing Market. The buyers are still withdrawing offers and sellers are still removing their homes from the market. The general uncertainty is playing a smaller role in recent weeks. There have been delays in closings due to financing issues as loan funding has slowed down. Sales were down 28% from early March, statewide. According to the California Association of Realtors, there has been the biggest drop in housing starts in 1984. The pandemic, however, has not had much impact on prices yet.
Short-run estimates of COVID-19 on California Housing Market (Data by California Association of Realtors)
- The economy will shrink by 30-40% in Q2.
- Unemployment expected to exceed 20%.
- Double-digit declines for California home sales.
- Declines expected to persist for April & May (maybe June).
- Price impacts expected to remain in single-digits.
- Mortgage credit remains difficult to obtain.
- The big wildcard is the virus—the second wave means worse.
- Expect ongoing challenges at least through May/June.
- Starting to see some light at the end of the tunnel.
San Diego Real Estate Market Forecast 2020 – 2021
What are the San Diego real estate market predictions for 2020? Let us look at the price trends recorded by Zillow (a real estate database company) over the past few years. Since 2015, the median home price in San Diego has appreciated by 32.8% from $491,000 to $652,000.
Last year saw was the seventh consecutive year of home price gains. The median home value in San Diego (on Zillow) is $679,568, up by 6% from a year ago. According to them, the latest San Diego real estate market forecast depicts a cooling trend in the market. The home prices are predicted to remain flat or may just drop by 0.8% in the next twelve months.
Here is the San Diego, CA real estate price appreciation graph by Zillow. It shows us the current home price appreciation forecast of -0.8% until March 2021.
Here is another short and crisp San Diego housing market forecast for the 3 years ending with the 3rd Quarter of 2021. The accuracy of this forecast for San Diego is 77% and it is predicting a positive trend. LittleBigHomes.com estimates that the probability of rising home prices in San Diego is 77% during this period. If this price forecast is correct, the San Diego home values will be higher in the 3rd Quarter of 2021 than they were in the 3rd Quarter of 2018.
Check this page each quarter for updates to the San Diego Housing Market Forecast.
San Diego Real Estate – San Diego CA Homes For Sale
San Diego has a mixture of owner-occupied and renter-occupied housing. As per Neigborhoodscout.com, a real estate data provider, one and two-bedroom single-family detached are the most common housing units in San Diego. Other types of housing that are prevalent in San Diego include large apartment complexes, duplexes, rowhouses, and homes converted to apartments.
There were 4,100 single-family homes and 6,400 multi-family homes built in 2017, compared to 2,200 single-family homes and 7,800 multi-family units in 2016. Today, the general trend for SFR construction in San Diego County is still far below the 2002-2004 numbers. The next peak in single-family residential construction will likely begin around 2021 but it is highly unlikely to return to the frenzied mortgage-driven numbers seen during the Millennium Boom.
At the national level, the single-family rental homes have grown up to 30% within the last three years. Almost all the housing demand in the US in recent years has been filled by single-family rental units. With 2020 being, theoretically, in the middle of a boom, there are still 4 years for residential construction to surge. Most likely, a housing shortage will remain in 2020, keeping home prices high.
Currently, there are 1042 homes for sale in San Diego, CA on Zillow. Additionally, there are 1012 homes for rent. Under potential listings, there are about 6 Foreclosed and 281 Pre-Foreclosure homes. These are the delinquent properties that may be coming to the market soon but are not yet found on a multiple listing service (MLS).
- The median list price per square foot in San Diego is $487, which is higher than the San Diego-Carlsbad Metro average of $390.
- The median price of homes for sale is $699,900.
- The median price of homes that were sold is $619,200 (March 2020).
- The median rent price in San Diego is $2,750, which is higher than the San Diego-Carlsbad Metro median of $2,700.
There are currently 3577 homes for sale and 2360 homes for rent in San Diego on Realtor.com, a real estate listings website. The newly listed homes are 428. According to their statistics, in April 2020, the San Diego housing market was a balanced market, which means there was a healthy balance of buyers and sellers in the market.
Ideally, a buyer would prefer a sale to asking price ratio that’s closer to 90%. The sellers in San Diego have managed to hold good leverage in these negotiations in the past month. On average, they could sell homes for 100% of the asking price. A seller would always prefer scenarios that can yield a ratio of 100% or higher.
In April 2020, the median list price of homes in San Diego, CA was $720K, trending up 4.5% year-over-year. The median listing price per square foot was $494. The median sale price was $644K.
San Diego Real Estate Foreclosure Statistics
Here are some foreclosure statistics of the San Diego real estate market. As per the foreclosure data by Zillow, in San Diego 0.3 homes are foreclosed (per 10,000). This is lower than the San Diego-Carlsbad Metro value of 0.5 and also lower than the national value of 1.2. The percent of delinquent mortgages in San Diego is 0.4%, which is lower than the national value of 1.1%. The percent of San Diego homeowners underwater on their mortgage is 5.0%, which is lower than San Diego-Carlsbad Metro at 5.0%.
There are currently 419 properties in San Diego, CA that are in some stage of foreclosure (default, auction or bank-owned) while the number of homes listed for sale on RealtyTrac is 1,608. In March 2020, the number of properties that received a foreclosure filing in San Diego, CA was 17% lower than the previous month and 13% lower than the same time last year.
| Potential Foreclosures in San Diego | 419 (RealtyTrac) |
| Homes for Sale in San Diego | 1608 |
| Recently Sold | 7216 |
| Median List Price | $649,925 (3% rise vs Feb 2019) |
In San Diego, the zip code with the highest foreclosure rate is 92114, where 1 in every 847 housing units is foreclosed. 92127 zip code has the lowest foreclosure rate, where 1 in every 2565 housing units becomes delinquent.
San Diego Real Estate Market: Is It A Good Place For Investment?
Now that you know where San Diego is, you probably want to know why we’re recommending it to real estate investors. Investing in real estate is touted as a great way to become wealthy. Should you consider San Diego real estate investment? Many real estate investors have asked themselves if buying an investment property in San Diego is a good investment? You need to drill deeper into local trends if you want to know what the market holds for the real estate investors and buyers in 2020.
Although this article alone is not a comprehensive source to make a final investment decision for San Diego, we have collected ten evidence-based positive things for those who are keen to invest in the San Diego real estate in 2020.
Let’s look at the state of the San Diego real estate market and the factors driving the property market short and long term.
1. The San Diego Housing Market Is a Relative Bargain
California is known for its insane real estate prices. San Diego stands out as a relatively affordable real estate market. The median home price is around $550,000. This sounds bad if you compare it to the national average of $300,000, but it is a bargain in California. You could snap up several San Diego rental properties for the price of one home in San Francisco.
2. Home Prices in San Diego Haven’t Been This Great a Deal in Years
The San Diego housing market is cooling. Home price appreciation fell below 5%, and home prices in some areas are declining due to decreasing demand. This is an improvement over the 6 to 8% appreciation San Diego had been seeing. The expanding inventory of houses on the market makes this a great time to invest in the San Diego housing market.
3. New Construction of Homes in San Diego is Quite Slow
San Diego is a growing housing market. However, construction in San Diego has stalled. Single-family residential construction is well below the demand for such homes in the San Diego housing market. There has been faster growth in the construction of multi-family housing in the San Diego real estate market, but that is also below historic rates.
Currently, both single-family and multi-family housing construction is increasing in San Diego. Even though there are more multi-family starts over single-family homes in terms of raw numbers, the percentage of single-family homes being constructed outpaces that of multi-family units.
4. San Diego Rental Rates Are Amazing
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.
5. San Diego Is More Landlord Friendly
We can’t say that California is landlord-friendly. However, specific cities are better for landlords and real estate investors than others. One reason to invest in the San Diego housing market over San Francisco or Los Angeles is the fact that San Diego is one of the few big cities that doesn’t have rent control. The city has groups fighting proposals to apply rent control to San Diego rental properties in addition to apartments.
6. San Diego’s Rental Population Is Massive
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.
7. San Diego Is a Great Place for Short Term Rentals
San Diego has many tourist attractions. Balboa Park is home to the San Diego Zoo, the Air and Space Museum, the Natural History Museum, the Desert Garden, the local youth Symphony, a Japanese garden, and a golf complex. There’s a SeaWorld in San Diego, an MLB stadium, the USS Midway Museum, and the San Diego zoo safari park. On top of this is the mild weather and proximity to the beach. Any San Diego rental properties in easy reach of these attractions command a premium on rental sites like Airbnb.
Demand for rentals in the San Diego real estate market soars during Comic-Con, one of the biggest comic conventions in the country. The only limit on San Diego rental properties has been the fluctuating rules by the city council, such as a measure passed limiting rentals to primary residences that were rescinded a few months later in 2018. Yet permission for rentals is limited in many master-planned communities and condo developments, keeping rents for Airbnb and other short-term rentals strong.
8. The Large Military Market Sustains the San Diego Rental Market
San Diego’s economy isn’t as reliant on tourism as other coastal towns. Instead, defense and the military are a larger part of the local economy. This dumps tens of thousands of renters into the San Diego real estate market who will never buy because they could be deployed elsewhere in a year or two. The military also gives generous allowances for those who rent San Diego rental properties, keeping rents near the military base strong regardless of the state of the economy.
9. The Diverse Student Market Feeds the San Diego Rental Market
San Diego is a major metropolitan area, and it is home to several colleges and universities. The University of California at San Diego is one of the largest. It is sometimes confused with San Diego State University, a different campus, and the University of San Diego. Point Loma Nazarene University is a Christian school in San Diego. National University is located in nearby La Jolla. Smaller schools like the Art Institute, Alliant International University, Azusa Pacific University, Brandman University, Miramar College, Mesa College, and California College of San Diego fill out the San Diego real estate market.
A side benefit of the diversified student market is that you can buy multiple properties across the San Diego housing market and enjoy a “diverse” investment portfolio. You won’t see demand for the property rise and fall based on the popularity of a flagship school, and the strong San Diego housing market allows you to rent it to newcomers to the area or military officers if you can’t fill the unit with students.
10. San Diego’s Housing Supply Is Constrained
San Diego shares several geographic constraints that other California coastal cities do. You can’t build on water. The Cowles Mountains limit how much the city can expand inland, constraining housing supply. Regulations limit high-density construction, preventing the area from meeting demand with too many tall condo towers. So, too, do the wilderness areas off-limits to construction like Cuyamaca Rancho State Park and Cleveland National Forest.
San Diego Real Estate Market: San Diego Investment Properties
Are you looking for an investment property in the San Diego real estate market? Maybe you have done a bit of real estate investing in San Diego but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. In any property investment, cash flow is gold. San Diego offers an ideal mix of limited supply, high demand, and excellent income potential. If you’re going to invest in California, it needs to be in San Diego.
Good cash flow from San Diego investment properties means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding the best investment property in San Diego in a growing neighborhood would be key to your success. If you invest wisely in San Diego’s real estate, you could secure your future. If you are a beginner in the business of cash flow real estate investing, it very important to read good books on real estate. The less expensive the San Diego investment property is, the lower your ongoing expenses will be.
As with any real estate purchase, act wisely. Evaluate the specifics of the San Diego housing market at the time you intend to purchase. When looking for the best real estate investments in San Diego, you should focus on neighborhoods with relatively high population density and employment growth. Both of them translate into high demand for housing.
Some of the popular neighborhoods in or around San Diego are Carmel Valley, Rancho Bernardo, Point Loma, Pacific Beach, Mission Valley, Mira Mesa, Rancho Penasquitos, Bonita, Del Cerro, North Park, La Jolla, 4s Ranch, Mission Hills, Otay Ranch and Rancho Santa Fe.
The asking price of single-family homes for sale in San Diego (on Realtor.com) starts from $132,000 for a 3-bedroom house and can go up to $37M for a luxury 10-bedroom house located in Northern San Diego neighborhood. It is a popular neighborhood for homebuyers who can afford to buy a home in the median price range of $1.14M.
There are currently 133 new construction houses available for sale in the San Diego housing market. You can get a 3-bedroom new construction single-family house for around $379,000 in the Southern San Diego neighborhood.
San Deigo home prices are some of the most expensive in all of the United States. Here is a snapshot that shows the median home values in some of the popular neighborhoods of San Diego.
If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable. You can also collaborate and learn from savvy real estate investors who have retired early on in their lives by investing in some of the hottest real estate markets like San Diego. You should also join real estate investment clubs in San Diego and try to make connections with fellow investors.
NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in San Diego.
Consult with one of the investment counselors who can help build you a custom portfolio of San Diego turnkey investment properties in some of the best neighborhoods. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete San Diego turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
San Diego & California Real Estate Investment Opportunities
Apart from San Deigo, you can also invest in several other real estate markets in California. California has the 6th largest economy in the entire world. This is largely driven by its innovative production, the heavy tech sectors in the state, and more. Apart from the San Diego real estate market, you can also invest in another hot market in San Jose. San Jose is part of Silicon Valley, a place where $100,000 a year or higher salaries from competing for tech firms has driven up the cost of real estate.
But what about the San Jose housing market itself? San Jose is the third-largest city in California, home to roughly a million people. It has the highest cost of living in any area in the U.S., and it is one of the most expensive housing markets in the country. If you want to invest in the San Jose real estate, you may not need to buy and renovate. Instead, if you know of industrial or commercial properties near major employers they may need to convert to employee housing, you could buy now and hold until it sells.
If that doesn’t happen, you could still turn it into a co-working space. In January 2018, Redfin ranked the ten hottest neighborhoods in the United States. Nine of the ten were in San Jose. When single home prices fall from 1.2 million to 1 million, homes now sit on the market for several days instead of being snapped up immediately.
The other good place for real estate investment in California is Sacramento. Sacramento is an island of sanity in an overpriced, over-regulated, and overheated West Coast housing market. It reflects the California ideal that most of the state has lost, and that’s we recommend it to investors over the “hotter” California metro areas. These are the same factors causing many Californians themselves to vote with their feet and move here instead of moving out of the state altogether.
If you’re considering Sacramento real estate investment, the diverse rental market is a definite plus. Being a state capital, it is home to several universities. This allows you to rent to the relatively large student market in addition to the local population. There is, of course, the University of California campus in Sacramento, but you could own investment properties by American River College and other, smaller schools in the area, too.
*Remember, caveat emptor still applies when buying a property anywhere. 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, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
References:
- Latest Market Data, Trends, and Statistics
https://www.car.org/marketdata/interactive/citylevelstats
https://www.car.org/marketdata/data/countysalesactivity
https://www.zillow.com/SanDiego-ca/home-values
https://www.movoto.com/san-diego-ca/market-trends/
https://www.realtor.com/realestateandhomes-search/San-Diego_CA/overview
https://www.sandiegorealestatehunter.com/blog/san-diego-real-estate-market-forecast
https://gordcollins.com/real-estate/san-diego-housing-forecast
http://www.homebuyinginstitute.com/news/san-diego-more-moderate-forecast https://www.zillow.com/research/2020-hot-markets-south-26293/ - California COVID-19 Economic/Market Update
https://car.sharefile.com/share/view/s2a8899fc081428a8 - General stats
http://worldpopulationreview.com/us-cities/san-diego-population - Cooling market
https://www.10news.com/news/making-it-in-san-diego/making-it-in-san-diego-slowing-housing-market-could-create-buying-opportunity - New housing supply
https://journal.firsttuesday.us/san-diego-housing-indicators-2/29246 - Relatively cheap market
https://www.cnbc.com/2019/02/27/spring-housing-market-could-be-coolest-in-recent-years-realtorcom.html
https://www.sandiegouniontribune.com/business/real-estate/sd-fi-corelogic-home-20180724-story.html - Rental rates
https://www.rentcafe.com/average-rent-market-trends/us/ca/san-diego
http://worldpopulationreview.com/us-cities/san-diego-population
https://www.mashvisor.com/blog/san-diego-real-estate-good-investment-strategy - Landlord friendly
https://www.sandiegouniontribune.com/business/real-estate/sd-fi-rent-control-20180703-story.html - Short term rentals
https://www.mashvisor.com/blog/airbnb-san-diego
https://www.sandiegoreader.com/news/2018/mar/07/city-lights-airbnb-forcing-you-out
https://www.sandiegouniontribune.com/business/tourism/sd-fi-airbnb-regulations-council-20181022-story.html - College market
https://www.niche.com/colleges/search/best-colleges/m/san-diego-metro-area - Mountains, Geography
https://www.sandiego.org/articles/east-county/san-diego-east-mountains.aspx - Foreclosures
https://www.realtytrac.com/statsandtrends/ca/san-diego-county/san-diego
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