San Diego Housing Market (2023 Statistics & Forecast)

San Diego Housing Market 2023

Updated September 6th 2023 

While many predict a crash in southern California, in reality the San Diego real estate markets have been all about cash!  The amount of mostly cash or all cash deals is staggering. The primary reason is the transfer of generational wealth with 1/3 of first time home buyers getting down payment assistance from family. Family wealth has accumulated with the exponential growth of equity markets over the last 10 years, tax cuts like the estate tax exemption, moves to lower cost of living states, and leverage - borrow money at 7% invest in a CD at 5% that's only a 2% difference.

Did you know that less than five million people have federal flood insurance. Around 30% of homes have policies even in high risk communities. Regular insurance policies don’t cover flooding and we know surprise flooding can happen.

This week the median list price for San Diego, CA is$1,425,999 with the market action index hovering around 68. This is less than last month's market action index of 70. Inventory has increased to 431.

The market has started cooling and prices have recently plateaued. Since we’re in the Seller’s zone, watch for changes in MAI. If the MAI resumes its climb, prices will likely follow suit. If the MAI drops consistently or falls into the Buyer’s zone, watch for downward pressure on prices.

Inventory has been climbing lately. Note that rising inventory alone does not signal a weakening market. Look to the Market Action Index and Days on Market trends to gauge whether buyer interest is keeping up with available supply. 

Each segment below represents approximately 25% of the market ordered by price.

Relocation Trends In San Diego CA

Redfin's data for March 2023 - July 2023, 29% of San Diego homebuyers searched to relocate out of San Diego, while 71% looked to stay within the metropolitan area.

San Diego Migration Trends

Los Angeles homebuyers searched to move to San Diego more than any other metro followed by San Francisco and Chicago.

Las Vegas was the most popular destination to relocate from San Diego followed by Phoenix and Dallas.

San Diego Real Estate Market

San Diego real estate market data for MiniLUXE single-family homes priced under $1M compares August 2023 from August 2022

• The average total market time was 24 days  
• The absorption rate is 1.4 months
• The average price per square foot is $536.  There were 675 new listings down 47.3%.
• There were 650 total pending sales down 28.9% and 610 total sold down 35%

San Diego real estate market data for MidiLUXE single-family homes priced $1,000,000-$3,000,000 compares August 2023 from August 2022

• The average total market time was 25 days 
• The absorption rate is up 60% at 3.2 months
• The average price per square foot is $685 up 3%.  There were 643 new listings down 17.4%.
• There were 499 total pending sales down 18.3% and 620 total sold 

San Diego real estate market data for CenterLUXE single-family homes priced $3,000,000-$5,000,000 compares August 2023 from August 2022

• The average market time was 35 days 
• The absorption rate is up 237% at 9.1 months
• The average price per square foot is $1089 down 5.5%.  There were 79 new listings 
• There were 46 total pending sales down 6.1% and 52 total sold up 26.8%  

San Diego real estate market data for UltraLUXE single-family homes priced $5,000,000+ compares August 2023 from August 2022

• The average market time was 50 days  
• The absorption rate is up 92.4% at 15.2 months
• New listings 43 up 7.5%
• The average price per square foot is $1,345.  There were 43 new listings up 7.5%.
• There were 39 total pending sales up 116.7% and 20 total sold up 42.9%  

San Diego condo market data for all MiniLUXE condos, townhomes, penthouses, and rowhomes priced under $1M compares August 2023 from August 2022

• The average market time was 20 days 
• The absorption rate is 1.7 months
• The average price per square foot is $600. There were 700 new listings down 22.7%
• There were 586 total pending sales down 26.5% and 615 total sold condos down 23%

San Diego condo market data for all MidiLUXE condos, townhomes, penthouses, and rowhomes priced $1M-$3M compares August 2023 from August 2022

• The average market time was 26 days 
• The absorption rate is up 130% at 4.6 months.
• The average price per square foot is $963. There were 181 new listings  
• There were 137 total pending sales up 16.1% and 132 total sold condos up 4.8%

San Diego condo market data for all CenterLUXE condos, townhomes, penthouses, and rowhomes priced $3M-$5M compares August 2023 from August 2022

• The average market time was 88 days 
• The absorption rate is at 538% at 13.4 months.
• The average price per square foot is $1,503. There were 14 new listings 
• There were 6 total pending sales up 55.6% and 10 total sold condos 

San Diego condo market data for all UltaLUXE condos, townhomes, penthouses, and rowhomes priced $5M+ compares August 2023 from August 2022

• The absorption rate is at 20 months.
• There were 2 new listings 
• There was 0 total pending sale 
• There were none sold

2023 is looking to be be modestly recessionary, with the Feds near the top of interest rate increases. As the Democrats prepare for the 2024 election, pressure will come from the White House and Senate to reduce mortgage rates and inflation. The majority of inflation was related to supply problems related to shipping and computer chips as well as gas prices.Homeowner equity has almost doubled In the past decade home equity has doubled and 1/3 of all San Diego homeowners are morgage free. While residential construction will decline 20-25%, non residential construction will continue without pause: six new hospitals, life sciences, military, educational, and apartment construction.

We are not only seeing signs of inflation coming down, but clear signs of DEFLATION:
1. Rental prices soared through Summer 2022, but have scaled back starting in October. Check out the rental price reductions on Zillow Rentals!

2. There are small to substantial price reductions depending on the community, location, and price band with seller negotiations, repairs, and seller paid closing costs again.

3. After many months of under-supply and soaring prices there is now a chip surplus.

4. Tesla and Ford price cuts

5. Lumber traded over $600 in June 2022 is now down over 16% around $500.

6. Crude oil is down 30% from $115 to about $80.

7. Over-stocked retail is now on sale.

8. Wage growth is slowing.

9. Whole Foods is reportedly asking suppliers to help the chain lower grocery prices.

US December inflation was down over 28.5% in just 6 months around 6.5%. The Fed’s preferred measure, Core PCE inflation rose 4.4% from a year ago, its smallest annual increase since October 2021. Consumer spending dipped 0.2%. Thousands have lost jobs.

Update May 2023 The decline in home prices thorughout San diego is in the price ranges under $750,000.  Homes priced above $750,000 are still performing.  January and February home sales were down 33% for single family homes and 36% for condos and townhomes while most pricing is relatively stable due to our ongoing inventory shortage.  While interest rates flucuate between 6.25 and 7%, we anticipate lower rates in the last half of the 3rd quarter to 4th quarter as those in office begin their battle for a 2024 victory.  Meanwhile a large percentage of our market is in a holding pattern.  Sellers have sub 3% rates, buyers are waiting for an interest rate improvement and or hoping pricing will soften.

Will house prices drop in San Diego 2024?

It's unlikely San Diego housing prices in the will drop next year in 2024 and highly likely prices will have increased over 2023.

Is San Diego in a housing bubble?

The 2005 bubble was a combination of irresponsible borrowing, high-risk lending, and rampant loan fraud.  Loan underwriting over the past 13-14 years has been responsible and prudent, mortgage rates are less than half of what they were in 05, and we have an imbalance of for-sale homes and demand.

Homeowners need three factors to be evident in order to make the difficult decision to walk away from their home and let it go into foreclosure (creating a housing bubble).

1. They need to expect that they'll never be able to afford this mortgage payment.

2. They need to be upside down, owe more on the loan than the house is worth.

3. They need to expect that they'll never be able to sell the house.

Demand is the factor to understand when predicting future foreclosure.  There is record equity growing each day and homeowners can sell within days to 2 weeks.

San Diego Real Estate

Research real estate market trends and find San Diego real estate.  Search for newly listed homes, open houses, recently sold homes, and recent price reductions in San Diego County. To change how the search is displayed, click the gray button next to "Sort" to display houses by price, number of bedrooms, or days on the market.

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Available San Diego Homes

There are two kinds of booming housing markets that emerged during the pandemic years:

1. The Transitory Boom Markets.
2. The Longterm Boom Markets.They are different. Let's explore both.

1. The Transitory Boom MarketsWhen COVID hit hard, many people re-evaluated - often hastily - where and how they wanted to live. Some of these people were highly reactionary expecting the very worst and an extended  global meltdown. Many immediately surmised that viral infection and death rates would be far higher in urban centers where the concentration of people was higher. This theory proved to be inaccurate. Some surmised that they could only live forever on a farm or a beach cottage or mountain hut without ever having explored that lifestyle. Many of these reactionaries have sinces realized their thoughts and aspirations were out of touch with their reality and they are re-visiting where they wish to live yet again. Some markets that experienced this insurgence of a new audience were unprepared and under-supplied and home prices surged at levels few thought sustainable. Some of these areas will erode some or most of these gains of the past 2 years.

2.  The Longterm Boom MarketsCOVID also triggered something that had been missing in the markets: the urgency to accelerate plans that had been mulled over but not acted on for some time:  retirement, a move to the suburbs, a move to a city, or smaller city, a move for political reasons, a move for lower state taxation, a move to a warmer or cooler climate, etc. These moves, while accelerated, causing exaggerated home price spikes, are less susceptible to big price declines. I'd suspect this arena re-balances, but with much less vigor than other markets and it's possible these areas may continue to see price appreciation, mostly fueled by under-supply, but equally by continued, growing demand.

This is but one more reason to examine markets individually in a hyper-localized housing world.

Speaking of inflation: it's nothing new. It - and other kinds of inflation (LUXE-FLATION) - have impacted our markets for decades. Right now it is very high fueled by explosive demand out of balance with supply chain recovery issues, under-production of energy resources, labor shortages, lots of cheap capital....and rampantly rising rents fueled by under-building.

The real estate market forecast shows signs of a somewhat slower bloom. Accounts of less crowded open houses, fewer private showing requests, longer days on market, and fewer offers on new listings are becoming more common. Due to the inherent time lag from a buyer's offer acceptance to a successful close of escrow, we are unlikely to see any significant statistical changes in the market until later in Q3.

When an overheated market starts to lose steam, (last seen in both 2020 and 2016), leading indicators start to reflect the shift with fewer multiple offers, gradual increases in available inventory and days on market, and a plateau of year-over-year appreciation rates.

As we've seen in prior downturns, after the downturn runs it's course, home prices begin to accelerate often quickly above the previous peaks. Buyers should be ready to take advantage of a slowing market and sellers it's more important than ever to prepare your home to shine in it's best light and price correctly.

2023 Statistics and Forecast

San Diego buyers are worried are they are buying at the top?

San Diego sellers are worried have they missed the top, is it too late?

Property Shark just published their top 100 list of the most expensive housing markets with Rancho Santa Fe #18 followed by Coronado and Del Mar.

As of December 4th nationwide initial job claims were 184,000, virtually the same as pre-COVID (a great indicator of the overall economy) San Diego County is up 61,600 jobs since last October with leisure and hospitality jobs still lagging pre-Covid levels. The nationwide unemployment rate will end the year at around 4%.

Since November 2020, resale prices in San Diego County have advanced by 18.5%, following a pattern of recent months. With low cost of borrowing and high equity, right now is a really good time to move up and keep your prior primary as a rental property. This trend has played into inventory falling each year, year over year.

Construction costs are out of control with a labor shortage. Lumber prices have increased to more than $1,000 per 1,000 board feet from $300 per 1,000 board feet. Fixtures like plumbing, lighting, and appliances are stuck on ships (most are manufactured overseas.) More than 1.7 million units of new single family residences, condos, and apartments were underway in 2021 with the highest production level since the last great recession. 2022 expects production of 1.5M-1.7M units with a return to more normal once backlogs are filled. The recently approved Federal Public Works legislation will contribute to a significant increase in non residential construction primarily in the public sector.

6.46 million existing single family homes and condomiums sold in 2021, a decade high with the supply reduced to 3.1 months. Residential real estate purchases made by investors were surprisingly high with more than a quarter of homes sold to investors in 2021. With a very very tight supply of available homes and mortgage rates rising, resales will decline to between 5M-5.5M.

When the Feds begin to increase the discount rate, there will be an immediate effect on the 10-year T-bill. The 10-year T-bill determines mortgage rates. It's expected mortgage interest rates will be 3.75%-4% by the end of 2022. With increasing home prices affordability will be affected.

Residential new construction for San Diego in 2022 will add approximately 9,000 housing units. The nonresidential sector will be explosive with government-funded projects:

• New Terminal 1 at the airport
• New border crossing in Otay Mesa
• Continued military spending
• Highway construction.
• Continued development of life sciences and industrial space

2021 we had an average of 2.75% 30 year fixed mortgage rates, $842,000 median single-family home price, an increase of 18.6%. Condos and townhomes $545,176 median home price and an increase of 18.5%.  Home price appreciation for San Diego County is anticipated to be 8%.