A recent study on the Austin housing market suggests mixed signals and uncertainty regarding a potential housing crash. Similarly, the San Diego housing market also exhibits mixed trends, with some areas showing signs of correction while others stabilize. Despite a cooling housing market nationwide, home prices in both Austin and San Diego remain historically high compared to pre-pandemic levels.
Find out some of the key trends developing in the San Diego housing market in 2023 and what may lay in store for the future.
The San Diego market overview
The San Diego metro area housing market is experiencing a significant slowdown in the rise of home prices, especially compared to the rapid increases seen during the pandemic. For instance, from June 2020 to June 2021, the median sale price surged by 26.4%, and from June 2021 to June 2022, it increased by 11.7%. However, unlike many other housing markets, San Diego didn't see a decline in home prices over the past year, with a modest 1.2% increase from June 2022 to June 2023, reaching $870,000.
In the city of San Diego itself, home prices have continued to rise, but at a slower pace. The median sale price increased by 3% from $903,000 in June 2022 to $930,000 in June 2023. This contrasts with the substantial year-over-year growth of 24% from June 2020 to June 2021 and 12.9% from June 2021 to June 2022. The 2022 to 2023 increase aligns more closely with the pre-pandemic growth rates of 2.5% from June 2018 to June 2019 and 1.5% from June 2019 to June 2020.
In other San Diego metro area cities, however, housing markets experienced declines in home prices. Solana Beach saw the largest decrease at 15.3%, from $1.8 million in June 2022 to $1.525 million in June 2023. National City followed with a 14.8% drop, from $710,000 to $605,000 during the same period. El Cajon had a 7.3% decline, from $766,000 to $710,000. It should be noted, that Solana Beach has had significant price fluctuations in recent years, with a 42.5% drop from June 2019 to June 2020, followed by a 95.9% increase from June 2020 to June 2021.
Most San Diego housing markets have seen year-over-year declines in home prices, but some exceptions include Coronado with a 29.5% increase, Imperial Beach up 20.4%, and Poway rising 13.2%. However, it's unlikely that pre-pandemic home price levels will return unless a severe economic recession occurs, and even then, a drop of $300,000 or more, as seen in 2018 and 2019, is unlikely.
Inventory in the San Diego Housing Market is still low
In contrast to some other housing markets, like Las Vegas, where inventory increased in every major city from 2022 to 2023, the San Diego housing market stands out. Here, 17 out of 18 major cities experienced a year-over-year decrease in available-for-sale inventory, setting it apart from the trend observed in Las Vegas. The table below details the change in available-for-sale inventory in the greater San Diego housing market:
Solana Beach, despite a 15.3% drop in median sale prices, saw a 44.8% increase in available inventory from June 2022 to June 2023. However, these changes are less dramatic than those during the pandemic. For instance, Poway's inventory surged by 114% from June 2021 to June 2022. In the overall San Diego metro area, inventory dropped by 46.7%, making a housing market crash seem unlikely in the near future due to limited inventory build-up.
See the San Diego Housing Market by Inventory graph: https://www.datawrapper.de/_/r3HV3/
Active Listings with Price Drops Have Actually Declined from 2022 to 2023
We analyzed the percentage of active listings reducing prices monthly, a key housing metric. A decrease suggests sustained homebuying activity without major price cuts, while an increase indicates a cooling market where price drops are needed to sell homes.
In the San Diego metro area, 27.1% of active listings had price drops in June 2023, down 26.3% from June 2022 (36.8%). In the city of San Diego, the percentage dropped from 36.2% in June 2022 to 28.3% in June 2023, a 21.8% decrease.
In fact, only four major cities in the San Diego metro area saw an uptick in their percentages of active listings with price drops: Coronado, Encinitas, Solana Beach, and Del Mar. Not surprisingly, these four cities also have some of the highest median sale prices in the greater San Diego housing market.
See the San Diego Housing Market by Price Drops full graph: https://www.datawrapper.de/_/zySwZ/
Median Days a Home Spends on the Market in San Diego is Fairly Stable
Another valuable metric for assessing the housing market is the "days on market," which measures how long a home remains for sale before being sold. In the San Diego metro area, the median days on the market remained consistent year-over-year, staying at 12 days in both June 2022 and June 2023. Similarly, in the city of San Diego, the median days on the market also remained unchanged at 12 days from June 2022 to June 2023.
See San Diego Housing Market by Median Days graph: https://www.datawrapper.de/_/zsJPX/
The Bottom Line on Will the Housing Market Crash in San Diego
Based on our analysis, a housing market crash in San Diego seems highly unlikely. The area has not seen a significant housing inventory buildup, and while home price growth has slowed or slightly declined from its 2022 peaks, there have been no major crashes. Most homeowners secured mortgages during the era of low-interest rates in the 2010s, reducing the risk of repayment shocks. San Diego's housing market appears relatively stable, especially compared to markets like Las Vegas or Phoenix.
Read full article: https://www.forbes.com/sites/andrewdepietro/2023/08/23/despite-some-slowdown-the-san-diego-housing-market-is-looking-stable-in-2023/?sh=47fbe16138b6
