San Diego Real Estate Market: Closed Sales Down Over 30%
San Diego’s real estate market is largely driven by location and proximity to amenities such as beaches, parks and attractions. As such, areas with higher desirability tend to have higher sale prices. The local housing market is currently experiencing a contraction like the rest of the United States after the COVID Pandemic growth years.
As you’ll see in the diagrams and graphs below, the home value in San Diego has dropped roughly $50,000 in the past 6 months of sales data. Which has helped with housing affordability but also created fear of another housing bubble like 2008. We’ll examine the current state of the real estate market in San Diego, including trends in home prices, sales activity, and inventory levels, as well as factors that may be impacting the market. Whether you’re a potential buyer, seller, or investor, this article will provide valuable facts about the San Diego real estate market.
Key Takeaways
Real Estate Market San Diego Update
The San Diego real estate market has seen some fluctuations over the past few months. According to Federal Reserve Economic Data research, home values in the area have dropped since peaking in June 2022, when the median home value reached $948,250. However, in July the median home value started dropping slightly and it continued to decrease in July with a median home value of $899,900. The median home price in San Diego hit a low of $884,000 in November of 2022 but did rebound a bit in December which is the last listing data point. This suggests a downward trend in the San Diego property market over the past few months. However, it may have started to level off and we will get a better idea if this has happened during the early months of 2023.
San Diego Real Estate Market Trends
The San Diego real estate market has had some major changes in the number of housing listings over the past few months. According to the St Louis Fed data chart above, the number of property listings peaked in October of 2018 at 7880. However, that has fallen off significantly and in February 2021 the number of active listings dropped to 2215. In July 2021 it jumped up and the number of home listings increased to 3151, but it decreased again in January 2022 to 1484. It jumped up again in August of 2022 but it decreased again in December 2022 to 3220. This suggests that the San Diego real estate market has been relatively volatile over the past few months and years, with movement in the number of active property listings fluctuating up and down.
2023 San Diego Real Estate Market Forecast
Real Estate Market San Diego Forecast Factors
- Historical Trends: Look at the historical trends of the real estate market and use them to assess the future performance of the market.
- Economic Factors: Consider factors such as GDP growth, unemployment, inflation, and other economic indicators when evaluating the real estate market forecast.
- Supply & Demand: Analyze the supply and demand dynamics in the area to determine the potential for future growth or decline in the real estate market. Following real estate news websites and topics is key to understanding the future.
- Demographic Trends: Analyze the demographics of an area, including population growth, age, income, and education levels, to determine how these factors may influence the real estate market.
- Location: Location is typically a key factor in determining the value and performance of the real estate market. Evaluate the current and potential future locations of the market in direct comparison to the national average.
Housing Inventory: Median Listing Price in San Diego-Carlsbad, CA
Homeownership Rate (5-year estimate) for San Diego County, CA
Market Hotness: Median Days on Market in San Diego-Carlsbad, CA
Housing Inventory: New Listing Count in San Diego-Carlsbad, CA
Employed Persons in San Diego County, CA
Real Gross Domestic Product: All Industries in San Diego County, CA
Per Capita Personal Income in San Diego-Carlsbad, CA
Resident Population in San Diego County, CA
Unemployment Rate in San Diego County, CA
Historical Housing Market Trends
Observations to watch in the San Diego real estate market are the house listings median days on the market and the homeownership rate. Currently the median days on the market has increased to a 5 year high from average which is a major detail to watch. Looking at the 5 year trend we see that this is normally followed by a price drop due to it becoming a buyers market but interest rates need to come down or that trend may not match history. We have also seen a upward trend in homeownership since 2016 which helped increase prices as there was more competition for the same supply of homes.
San Diego Economy
The economy in San Diego is going strong as you can see in the data charts above with the unemployment rate has returned to the normal pre-pandemic rate, per capital income has continued to climb and the Real GDP in the county has recovered from the dip int 2020. The references also show employment numbers have also returned to close to pre-lockdown levels. All these are strong indicators for the housing market to not see a huge decline in 2023 unless a major recession hits the United States. The key info to look at for indication that a price drop is coming would be if the unemployment rate starts rising close to the 5% level.
Real Estate Supply & Demand
The important signal to look at here is the new property listings on the market and as you can see from the data chart above, San Diego real estate market is at a 5-year low of new real estate listings coming on the market. This currently is balancing out the decrease in demand due to interest rates rising over the past year. However, as we can still see this hasn’t stopped the prices from falling as there has been an almost 8% decrease from the high home value in May of 2022. If interest rates don’t drop in 2023 the only hope for prices to remain stable is the new listing count to remain low.
Demographics
Since the pandemic started in 2020, there has been a large number of Californians leaving the state and moving east to states such as Florida and Texas. San Diego hasn’t been immune to this having lost almost 100,000 people within the past several years. Normally this would likely hurt the housing market with less demand, but San Diego is lucky to have a large Military presence which brings a steady supple of new residents every year. This has been a saving grace for the housing market since the Federal Reserve started raising rates. Make sure to always keep government output on your mind.
San Diego Mortgage Information
San Diego Interest Rates
January 21st Rates
| 30 Year FHA | 6.48 % |
| 30 Year VA | 5.838 % |
| 10 Year Fixed | 5.55 % |
| 15 Year Fixed | 5.463 % |
| 30 Year Fixed | 6.256 % |
| 5/1 ARM | 6.236 % |
| 7/1 ARM | 6.111 % |
| 20 Year Fixed | 5.933 % |
Source: Freddie Mac
The mortgage rates in San Diego County are a vital factor to consider when exploring the real estate market. Interest rates have been a big home loan talking point in the last few years as the Federal Reserve has increased rates significantly since the beginning of 2022. The Fed was forced to drive up interest rates to try and slow the economy as inflation was out of control. Inflation has started to cool off many due to the fear of a global recession, and many are hopeful that the Federal Reserve will stop raising interest rates in 2023. If this happens we can expect to see interest rates return to below 5%. However, always remember that you can refinance your home loan at a later date when mortgage rates return to normal levels.
Median & Average Rent In San Diego Market
According to recent data from Airdeed, the median rent in San Diego is currently between $1980 and $5,250 per month depending on the amount of bedrooms. These figures are higher than the national median rent per bedroom which makes sense due to San Diego being a very attractive place to live. The below table showcases both median rental prices and average rental prices in San Diego.
| Bedrooms | Median Monthly Rental Price | Average Monthly Rental Price |
|---|---|---|
| Studio | $1980 | $2290 |
| 1 Bedroom | $2350 | $2414 |
| 2 Bedroom | $3300 | $3696 |
| 3 Bedroom | $4100 | $4636 |
| 4 Bedroom | $5250 | $5917 |
The increase in rental prices is largely driven by a lack of available inventory. Low levels of housing supply, increasing population and many investors capitalizing on recent high appreciation rates by selling have created a less desirable affordable housing situation. In addition, rising mortgage rates have further reduced buying power, leading many prospective homebuyers to remain renters instead. As such, rental prices are likely to continue their upward trend in the near future.
It is clear that average rent is an important factor when assessing the health of the San Diego real estate market. With high demand and limited supply driving up prices, landlords are increasingly raising monthly rent to increase their source of income. To find good deals renters need to invest time and effort into researching their options thoroughly.
San Diego Real Estate Investing
If you’re a real estate entrepreneur San Diego is a great investment location as it has a massive amount of beach access which makes it a very popular vacation rental destination. However, the cities in the San Diego area have started to regulate Airbnb properties more. In addition the high real estate prices make investing in vacation rentals in the area a more complicated decision. We don’t suggest currently buying a property for Airbnb or VRBO unless you are mainly buying for a personal vacation home and will only rent on the side.
Creative Financing Options For Real Estate Investors
Creative financing options to leverage investments include government-backed loans to private capital, the possibilities are virtually endless. In addition to conventional methods of financing, investors can also use a variety of alternative financing tools such as crowdfunding and hard money lenders.
Crowdfunding has become an increasingly popular option among real estate investors in San Diego. Platforms like Fundrise and RealtyMogul allow individuals to pool their resources together to invest in projects with returns that may be higher than traditional investments. The benefit of crowdfunding is that it requires little upfront capital and does not require investors to obtain traditional financing from banks or other lending institutions. Hard money lenders offer short-term loans secured by real estate collateral, providing access to fast cash for those who need it quickly but lack the creditworthiness necessary for bank loans. These types of loans come at a steep cost but can be beneficial when used correctly.
The San Diego real estate market offers an array of creative financing options for real estate investors looking to maximize returns on their investments and take advantage of the booming market. With careful research and consideration, these alternatives can be extremely advantageous for those who understand how they work and when best to use them.
Frequently Asked Questions
What Are The Best Neighborhoods To Buy A Home In San Diego?
The San Diego real estate market provides numerous opportunities for prospective buyers to find the perfect home. This article examines the best neighborhoods to buy a home in San Diego and will provide an overview of the current market conditions.
When considering where to purchase a home, it is important to look at both the short-term and long-term benefits of each neighborhood. Factors such as affordability, safety, access to amenities, transportation options, school districts, and local businesses should all be taken into account when making a decision. Some of the most popular neighborhoods in San Diego include Downtown, La Jolla, North Park, Pacific Beach, Hillcrest, and Coronado. Each of these areas has its own unique characteristics that can make them appealing for different reasons.
In terms of affordability, Downtown is one of the more budget-friendly options due to its central location and variety of housing types. La Jolla is known for its high-end properties with beachfront views and excellent schools. North Park is an up-and-coming area with plenty of restaurants and nightlife options. Pacific Beach offers a laidback atmosphere with easy access to beaches and parks. Hillcrest is popular for its vibrant culture and wide range of ethnic cuisines while Coronado boasts stunning views across the bay from its iconic bridge.
San Diego provides many options for those looking to buy a home in a desirable area with great potential for appreciation over time. It is essential that potential buyers take into account their individual needs before making any decisions on where they want to live so they can find the perfect fit for their lifestyle and budget.
What Are The Average Closing Costs For A Home Purchase In San Diego?
When buying a home in the San Diego area, it is essential to understand what the average closing costs are. Closing costs can be significant and vary depending on the location and type of property being purchased. For example, a two-bedroom condo in downtown San Diego could have significantly different closing costs than a four-bedroom house in North County. As such, it is important for potential home buyers to have an understanding of what they might expect when purchasing in San Diego before entering into any negotiations.
Real estate market analysts in San Diego typically estimate that closing costs will range from about 1%-2% of the purchase price of the property. These costs can include things like title insurance, appraisal fees, loan origination fees, document preparation fees, escrow fees and transfer taxes. Some of these expenses may be negotiable or even waived by sellers if requested by buyers during negotiations. Additionally, buyers should also factor in extra costs such as homeowner’s association dues if applicable and any other related expenses associated with the purchase.
Taking all these factors into consideration can help buyers better prepare financially for their real estate purchase and avoid any surprises or budget-breaking surprises along the way. It is also wise to speak to an experienced real estate professional who can provide insight into potential closing costs prior to making an offer on a property.
What Incentives Are Available For First-Time Home Buyers In San Diego?
When examining the incentives available for first-time home buyers in San Diego, it is important to understand the local market and the regulations that govern it. In California, there are several government-backed programs that can help potential buyers with their down payment and closing costs. Additionally, many private lenders offer special loan products designed to benefit first-time buyers.
The most common incentive offered by the government is an FHA loan, which provides a lower down payment requirement and lower interest rates than a conventional loan. Additionally, some local governments have special grant programs that provide funds for closing costs or other expenses associated with purchasing a home. For example, San Diego County offers grants up to $50,000 to assist qualified first-time buyers with closing costs. Private lenders often have special loan products tailored to first-time buyers such as reduced interest rates or waived fees.
Researching all of these options is essential due to the complexity of the real estate market in San Diego. Comparing different loan types and incentives can help determine which one will be most suitable for an individual’s financial situation and goals. It is also important to note that these programs may have certain qualification criteria such as income level or credit score requirements so prospective buyers should do their due diligence before applying for any program.
What Are The Tax Implications For Owning Rental Property In San Diego?
Owning rental property in San Diego generally comes with tax implications, and it is important for real estate investors to be aware of these implications. An investor needs to evaluate the potential gains or losses from owning rental property in San Diego and how they may be impacted by local taxes. Generally, the income generated by a rental property must be reported as taxable income on an individual’s personal tax return. It is also important to consider other taxes that may apply such as real estate taxes, capital gains taxes, and depreciation recapture.
Real estate investors should also take into account any incentives or deductions that may be available when filing their taxes. For example, a taxpayer may be able to deduct certain expenses associated with their rental property such as repairs or maintenance costs. Additionally, there are some deductions available for depreciation of the property or for improvements made to the property which could reduce a taxpayer’s taxable income. Being aware of any incentives or deductions can help an investor maximize their return on investment while minimizing the impact of taxation on their rental properties in San Diego.
In order to make informed decisions about investing in rental properties in San Diego, it is essential for investors to understand the tax implications associated with owning rental property in this area. Knowing what deductions and incentives are available can help investors maximize their returns while minimizing their tax burden. Real estate analysts should research all applicable laws and regulations before making investments so that they can make wise financial decisions when investing in San Diego real estate.
What Laws Or Regulations Should I Be Aware Of When Investing In San Diego Real Estate?
Investing in real estate can be an exciting, but intimidating venture. With the potential for great returns and a variety of tax advantages, it’s no surprise that many people are attracted to this area of investing. However, it is important to be aware of the laws and regulations surrounding real estate investments before taking the plunge. When considering investing in San Diego real estate, there are several key areas to bear in mind.
Firstly, it is important to recognize the different types of ownership available in San Diego. These include single-family homes, condos, townhomes and multi-unit buildings. Each type of property has its own legal considerations pertaining to zoning, taxes and other aspects of ownership. Additionally, investors should be aware of any applicable tenant protection laws that could affect rental income or occupancy rates. It is also wise to research local ordinances related to rental properties as these can have a bearing on your ability to generate income from your investment property.
Furthermore, understanding San Diego’s housing market trends is essential for making informed decisions when buying or selling property. Keeping abreast of changing mortgage interest rates, median home prices and vacancy rates will help you make educated decisions about when and where to invest. Additionally, investors should be familiar with the rules regarding financing options for investment properties as this will impact their ability to secure long-term capital gains from their investments. Taking into account all these factors will help ensure successful real estate investments in San Diego.
San Diego Real Estate Market Summary
In conclusion, the San Diego real estate market is one to continue evaluating throughout 2023, if new home listings coming on the market jump above the 5,000 level and the unemployment rate starts moving up, you can expect a significant impact on housing prices in a negative way. As more homes become available, prices may drop, while a high unemployment rate can lead to a decrease in demand and a corresponding decrease in prices. Be a well informed buyer or seller by looking a the new data coming out. However, if the U.S. is able to starve off a major recession, San Diego should avoid a major housing bubble and prices should remain flat or slightly up for 2023 and home loan rates should start decreasing.
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