The San Diego Real Estate Market is Slowing
According to the data provided by the California Association of Realtors (CAR), the San Diego housing market experienced an increase in the median sold price of existing single-family homes in February 2023 compared to both the previous month. The median sold price for existing single-family homes in San Diego was $875,000 in February 2023, which is a 6.1% increase from January 2023 and a 1.5% decrease from February 2022. This suggests that the housing market in San Diego is currently experiencing a price growth trend.
Furthermore, the sales of existing single-family homes in San Diego increased by 11.5% compared to the previous month and decreased by 32.6% compared to the same month last year. Southern California as a whole had a lower median sold price for existing single-family homes in February 2023, which was $745,000. However, the region experienced a 0.9% increase in median sold price compared to the previous month, indicating that the overall housing market in Southern California is also seeing a price growth trend.
It's important to consider the potential effects of interest rates on the market. When interest rates are high, it can be more difficult for people to buy homes, which can lead to a decrease in demand for housing. This decrease in demand can then lead to a decrease in the median sold prices of homes in the area. Moreover, high-interest rates can also lead to higher mortgage payments, which can make it more difficult for people to afford homes. This can then further decrease demand for housing and cause a slowdown in the housing market.
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 San Diego condo/townhome market has seen a moderate increase in median sold prices, according to C.A.R.'s condo report. In February 2023, the median sold price was $615,000, which is a 4.8% month-over-month increase from January 2023 and a 0.0% year-over-year increase from February 2022. However, it is important to note the year-over-year change in the single-family home market was -1.5%.
On the other hand, the sales activity for condos and townhomes in San Diego has seen a sharp decline compared to the previous year. In February 2023, sales were down 35.5% compared to February 2022. This may be due to a variety of factors, including high-interest rates, changing buyer preferences, and market conditions.
Overall, while the condo/townhome market in San Diego has seen a modest increase in prices from the previous month, the significant decline in sales activity may indicate a shift in the market. It will be interesting to monitor this trend in the coming months to see if it continues or if there are any changes in the market dynamics.
Looking at the unsold inventory index for condos, which is the number of months it would take to sell all the homes on the market if no new properties were listed, San Diego has a relatively low index of 2.1 months, indicating a seller's market where there are more buyers than available properties. However, the index has decreased slightly from Jan 2023 when it was 2.6 months.
Compared to Feb 2022, the index has increased from 1.3 months, indicating a slower market. In terms of median time on the market, San Diego condos are selling relatively quickly with a median of 14.0 days. However, the median time has increased from Jan 2023 when it was 22.0 days, and from Feb 2022 when it was just 6.0 days.
In conclusion, the San Diego condo/townhome market has shown a moderate increase in median sold prices from the previous month, but a significant decline in sales activity compared to the previous year. This may be due to several factors including high-interest rates and changing market dynamics.
Despite the low unsold inventory index indicating a seller's market, the median time on the market has increased from the previous year. As the market dynamics continue to evolve, it will be important for buyers and sellers to stay informed about current trends and work closely with a real estate agent to make informed decisions. While the market is showing some signs of slowing down, the continued popularity of San Diego as a desirable place to live may lead to continued demand for condos and townhomes in the area.
Is San Diego County a Seller's Hossing Market?
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. San Diego County, California is a highly sought-after location for home buyers and sellers alike. With a beautiful coastal location, thriving job market, and endless amenities, it's no surprise that San Diego County's real estate market is booming.
As of February 2023, the median listing home price in San Diego County, CA was $875,000, up 9.4% year-over-year. The median listing home price per square foot was $553, and the median home sold price was $785,000. This data suggests that home values are continuing to rise in San Diego County, which is good news for sellers. However, buyers may face steeper competition and potentially higher prices in this seller's market.
The median days on market for homes in San Diego County was 53 days in February 2023. This means that, on average, homes sold after just over a month on the market. However, it's important to note that the trend for median days on market has gone down since last month and slightly up since last year, indicating that homes may be selling faster than they were previously.
Therefore, San Diego County, CA is a thriving real estate market with rising home values, a competitive seller's market, and plenty of options for buyers and renters alike. Whether you're looking to buy or sell, understanding the current market conditions and trends is essential for making informed decisions.
Overall, the housing market in San Diego County and San Diego City is currently favoring sellers due to high demand and low inventory, but the increasing trend for median days on market suggests a potential shift in the future. For buyers, it may be beneficial to act quickly and be prepared to pay close to the asking price to secure a home in these competitive markets.
Is It a Good Time to Buy a House in San Diego?
The Buyer's Guide by C.A.R. provides a comprehensive snapshot of the local real estate market in San Diego County, California. The guide is aimed at realtors and their clients who are interested in purchasing a property in the area. The guide provides information on the median price of homes in the area, the number of homes available for sale, the current interest rates, and the monthly payment options for different down payment percentages.
Based on the data provided by C.A.R., the San Diego housing market is showing a mix of positive and negative trends for buyers. As of February 2023, the median price of a 1-bedroom home in San Diego County is $472,000, with a monthly payment of $2,870 and a down payment of $94,000. This is a relatively affordable option for buyers who are looking for a smaller home.
However, the median price of a 4+ bedroom home is $1.4 million, with a monthly payment of $8,511 and a down payment of $280,000. This is a significant investment for buyers who are looking for a larger home, and it may be challenging for some to afford. Moreover, the number of homes for sale in San Diego County is relatively low, with only 431 2-bedroom homes and 607 3-bedroom homes for sale as of February 2023. This limited inventory may make it more difficult for buyers to find the home that they are looking for.
The current interest rate is 6.26%, which is higher than last year's rate of 3.76% and slightly lower than last month's rate of 6.27%. In terms of interest rates, the current rate of 6.26% is higher than the rate from last year and slightly lower than last month's rate. High-interest rates can make it more challenging for buyers to obtain a mortgage and may lead to higher monthly payments, making it more difficult for some buyers to afford a home.
Overall, whether it is a good time to buy a house in San Diego depends on individual circumstances and preferences. While there are some affordable options for buyers, the high median price of larger homes and the limited inventory may make it challenging for some buyers to find the home that they are looking for. Moreover, high-interest rates may lead to higher monthly payments, which can make it more challenging for some buyers to afford a home. It is advisable for buyers to work closely with a real estate agent to stay informed about current market trends and make informed decisions.
San Diego Housing Market Forecast 2023-2024
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 $830,918. It indicates that 50 percent of all housing stock in the area is worth more than $830,918 and 50 percent is worth less (adjusting for seasonal fluctuations).
San Diego County's home values have gone up 2.0% 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 $830,924. The rate of appreciation will be much less than what we have seen in the last year when the mortgage rates were lower than 3.5%. 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 2.0% over the past year.
- Zillow predicts a home price decline of 0.5% between February 2023 to February 2024 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.
San Diego Area Housing Market Report
According to the Greater San Diego Association of REALTORS®, the Greater San Diego housing market has been experiencing a slowdown in buyer demand, resulting in a decline in home sales and an increase in inventory. The Federal Reserve's continued effort to curb inflation has resulted in the eighth interest rate hike since March of last year. Mortgage interest rates have dipped slightly from their peak last fall, which led to an increase in pending sales by 8.1% month-to-month. However, affordability constraints have limited overall homebuyer activity.
In the Greater San Diego area, closed sales decreased by 32.9% for detached homes and 36.1% for attached homes. Pending sales decreased by 30.9% for detached homes and 27.5% for attached homes. Inventory decreased by 1.8% for detached homes but increased by 4.1% for attached homes. The median sales price was down by 1.1% to $900,000 for detached homes and 1.6% to $616,000 for attached homes. Days on market increased by 87.0% for detached homes and 105.3% for attached homes. Supply increased by 37.5% for detached homes and 66.7% for attached homes.
The slowdown in buyer demand has resulted in a slowing of home price growth nationwide, although prices remain up from a year ago. Sellers have been cutting prices and offering sales incentives to attract buyers who are struggling with affordability challenges. The slight decline in mortgage rates earlier this year convinced some buyers to come off the sidelines, but with rates ticking up again in recent weeks, buyers are once again pulling back, causing sales activity to remain down heading into spring.
Overall, the Greater San Diego housing market is experiencing a slowdown due to affordability constraints and higher interest rates. The increase in inventory and longer days on market may provide opportunities for buyers who have been struggling to enter the market. However, sellers may need to adjust their pricing strategies to attract buyers in this current market.
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 March 2023, the average rent for a 1-bedroom apartment in San Diego, CA is $2,395. This is a 2% increase compared to the previous year. Over the past month, the average rent for a studio apartment in San Diego increased by 4% to $1,975. The average rent for a 1-bedroom apartment increased by 2% to $2,395, and the average rent for a 2-bedroom apartment remained flat.
- Two-bedroom apartment rents average $3,095 which is a 0% increase from last year.
- Three-bedroom apartment rents average $3,895 which is a 1% decrease from last year.
- Four-bedroom apartment rents average $4,700 which is a 5% increase from last year.
FAQs About San Diego Housing Market
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.