It’s Exciting, Interesting Time to be in the San Diego Real Estate Market!
The San Diego real estate market is one of the most attractive, in-demand areas across the country. With amazing views, outstanding year-round weather, and attractions that rival any city, San Diego has a lot to offer both visitors and residents.
For these reasons and more, people are looking to purchase homes in the San Diego market at levels rarely seen. This demand is creating unique challenges for everyone, and it’s making our area one of the fastest-rising major cities in the country.
Local Conditions and Economic Trends in the San Diego Real Estate Market
To research a housing market, there are countless data points, figures, and statistics you can consult. But if you really want to understand the market it helps to focus on a few individual factors, including the amount of active buyers, home prices, and available for-sale homes.
Demand for San Diego Real Estate is High as Ever
Determining exactly how many people want to purchase in a given market is tough. There simply isn’t a good way to precisely determine the number of buyers, at least compared to figures like for-sale homes, which are fairly easy to count.
However, all indications show that many people, more than usual, want to buy in San Diego. It’s not just the attractiveness of San Diego that is driving this trend, as low interest rates and built-up demand from 2020 have also led to increases in buyers.
A large amount of buyers in a market is not a problem as long as there are enough houses to go around. But in San Diego, we appear to not only have a lot of buyers but a low amount of homes for sale.
San Diego Inventory: Lower Than Normal
The Economic Research division of the Federal Reserve Bank of St. Louis says the available inventory has gone down significantly over the past few years. In October of 2018, for example, there were over 8,000 units available in San Diego County. This was the peak over the most recent 5-year period. But since then, the total count of available homes has steadily trended downward, and now sits at only 3,154 homes for sale in the entire county.
This trend appears to have started well before the disruption caused by COVID-19. In July of 2019, there were over 7,000 homes for sale; by December there were under 5,000, and the market has not seen over 5,000 since.
It appears the San Diego real estate market is similar to others, at least for inventory issues.bEven nearby counties appear to follow the same trend. Orange County, for example, has seen a steady decline in available houses for sale, as has nearby Riverside County.
In fact, this trend appears to be a state-wide concern. In October of 2018, there over 94,000 homes listed for sale across California. In March of 2021, there are just over 35,000.
Why are for-sale homes so rare? We can’t exactly say, and the reasons are surely complex. One likely cause is the continued presence of the pandemic. Yes, we are moving out of the pandemic, but there are likely still people who are wary of placing their home on the market when the virus is still causing issues.
With more sellers looking for homes and fewer houses available for purchase, there will inevitably be competition for housing. Anyone familiar with economics knows the supply-demand principal will into play.
So if supply is low but demand is high, you can imagine what will happen to prices…
San Diego Real Estate Prices: Still Climbing Upward
Buyers, sellers, real estate agents, and mortgage professionals want to know about overall prices. For this stat, there are actually many different sources that you can consult, and most of them are highly reliable.
Redfin, for example, is a major real-estate listing site that offers data for almost all regions, states, and cities across the country. According to their numbers, the median sale price (meaning half are higher, half are lower, which is different from average) in San Diego is $691,500 at the time of this article. Compared to this time last year, prices are up 5%.
These increases, which will come as no surprise to anyone who is familiar with the city, reflect a general upward trend in pricing. Just five years ago, in March of 2016, the median price was below $500,000. It has steadily trended upward, and even surpassed $700,000 for a brief period. Don’t be surprised if it reaches, passes, and stays above $700,000 again.
This increase is great for sellers, but concerning for people wanting to enter the market. There is a serious concern that low and moderate-income buyers will be priced out of the San Diego market, which means fewer people will have the chance to enjoy this fantastic area.
Days on the Market for San Diego Homes
The other important indicator for the overall market, the length of time that a house stays available, can greatly impact the behavior of buyers and sellers.
For this stat, we can simply stick with Redfin, which also provides information for how long listings stay on their site. According to their information, home listings go from new to pending sales in about 12 days, while “hot homes” can be sold in less than a week.
This means that not only is it expensive to purchase in San Diego, it can also be rapid. You may have to purchase above the asking price, and you could even have to waive contingencies.
All of these factors have caused Redfin to declare San Diego a “very competitive” market. With high prices, many homes receiving multiple offers, and a low amount of inventory, it would seem that the San Diego market will continue to be one of the hottest in the nation.
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