Despite Some Slowdown, The San Diego Housing Market Is Looking Stable In 2023

News Room
By News Room 14 Min Read

In a recent study of the Austin housing market and the possibility of a crash, the analysis of the data presented a markedly mixed picture of housing activity in the greater Austin area. Like Austin, the San Diego housing market too is sending mixed signals, with some cities in the San Diego metro area showing signs of a housing correction, while others are returning to a sort of normalcy. However, as is the case in many other major American housing markets, the cooling off in housing activity has still left home prices has historical highs when compared to the pre-pandemic era.

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.

San Diego Housing Market 2023: Overview

Using housing data sourced from Redfin
RDFN
, we conducted an incisive analysis of the San Diego housing market and where it stands as of June 2023 (the latest available data at the time of publication). For this analysis, we used the following metrics provided by Redfin:

  • Median sale price and change over 1, 2, and 5 years
  • Number of home sales per month and change over 1, 2, and 5 years
  • Available for-sale inventory and change over 1, 2, and 5 years
  • Number of active listings per month and change over 1, 2, and 5 years
  • Median days on market a home for sale spends before being bought up and change over 1, 2, and 5 years
  • Percentage of monthly active listings with price drops and change over 1, 2, and 5 years
  • Sale-to-list price ratio and change over 1, 2, and 5 years

The San Diego metro area housing market is displaying signs of a major moderation in home prices, especially in contrast to the surging year-over-year home prices during the core period of the pandemic-induced homebuying frenzy. For example, the median sale price in the San Diego metro area overall had risen by a startling 26.4% from June 2020 ($609,000) to June 2021 ($770,000), and then rose by double-digits — 11.7% — again from June 2021 to June 2022, when the median sale price reached $860,000. However, unlike many other American housing markets we’ve analyzed, the San Diego metro area did not witness a decline in home prices over the last year: The median sale price inched up by 1.2%, from $860,000 in June 2022 to $870,000 in June 2023.

In the city of San Diego proper, home prices have continued to rise but at a slower rate. From a median sale price of $903,000 in June 2022, it rose by 3%, reaching $930,000 in June 2023. Contrast this year-over-year growth with 24% from June 2020 ($645,000) to June 2021 ($800,000) and 12.9% from June 2021 to June 2022, when the median sale price reached $903,000. The rise in home prices year-over-year from 2022 to 2023 in the San Diego housing market is more on par with the home price growth of pre-pandemic years: Year-over-year growth from June 2018 ($620,000) to June 2019 ($635,500) was 2.5%; and from June 2019 to June 2020 ($645,000), it was 1.5%.

In other major cities that make up the San Diego metro area, however, housing markets did experience a decline in home prices, though only two cities saw double-digit percentage decrease. These were Solana
SOL
Beach, where the median sale price fell by 15.3%, from $1.8 million in June 2022 to $1.525 million in June 2023; and National City, where the median sale price dropped by 14.8%, from $710,000 in June 2022 to $605,000 in June 2023. The city with the third largest decline was El Cajon, where the median sale price declined by 7.3%, from $766,000 in June 2022 to $710,000 in June 2023. In should be noted that Solana Beach, in particular, has experienced major ups and downs in home prices in recent years: Its median sale price plummeted by 42.5% from June 2019 ($1.365 million) to June 2020 ($785,000), before rocketing back up by 95.9% from June 2020 to June 2021 ($1.538 million).

The table below breaks out the median sale prices in 19 areas of the San Diego metro area we analyzed, from June 2018 through June 2023. The table is ranked in order of areas that experienced the greatest year-over-year decline in their median sale price:

While the majority of the housing markets in the San Diego area did experience a year-over-year decline in home prices, there are notable exceptions, including the city of San Diego itself. For example, in Coronado, the median sale price increased by a staggering 29.5%, from $2.2 million in June 2022 to $2.85 million in June 2023. Another standout is Imperial Beach, where the median sale price rose by 20.4%, from $700,000 in June 2022 to $842,500 in June 2023. The city of Poway too experienced double-digit increases in prices, with its median sale price rising by 13.2%, from $1.06 million in June 2022 to $1.2 million in June 2023.

But the crucial fact is that the typical home prices in the greater San Diego housing market of the pre-pandemic era are not likely to return, save, perhaps, the onset of a genuine economic recession bringing prices down. However, even with a possible future recession, it is difficult to see home prices in the San Diego housing market dropping by $300,000 or more to the median sale prices of 2018 and 2019, for example.

Inventory in the San Diego Housing Market is Still Low

Another housing metric that separates the San Diego housing market from others we examined, such as the Las Vegas housing market, is that available inventory has declined year-over-year in all areas except one city. Whereas in the Las Vegas housing market, inventory increased year-over-year from 2022 to 2023 in every major city of the Las Vegas metro area, by contrast, in the San Diego metro area, 17 out of 18 major cities witnessed decreases in available for-sale inventory. The table below details the change in available for-sale inventory in the greater San Diego housing market:

Solana Beach — which has seen its median sale price drop the most, by 15.3% year-over-year — also experienced the greatest increase in for-sale inventory: From 29 homes for sale in June 2022, Solana Beach’s available inventory grew by 44.8%, reaching 42 homes for sale in June 2023. That increase in inventory, however, is nothing compared to the year-over-year changes during the core years of the pandemic. For example, in Poway, for-sale inventory surged by 114% from June 2021 (43 available homes) to June 2022 (92 available homes). Another example is the city of Santee, which experienced a year-over-year growth in inventory of 91.3% from June 2021 (46 available homes) to June 2022 (88 available homes).

For the San Diego metro area overall, available for-sale inventory dropped substantially — by 46.7% — from 4,743 homes in June 2022 to 2,529 homes in June 2023. The city of San Diego proper experienced a comparable decrease in inventory, declining by 45.4%, from 1,723 homes in June 2022 to 941 homes in June 2023. The city that witnessed the most severe drop in available inventory was Lemon Grove, which saw its for-sale inventory plummet by 82.2%, from 45 available homes in June 2022, down to just 8 available homes in June 2023. The almost complete lack of a significant build-up in housing inventory makes it seem unlikely that a San Diego housing market crash will occur in the near future.

Active Listings with Price Drops Have Actually Declined 2022 to 2023

We included a key housing metric that Redfin tracks, which is the percentage of active listings that dropped their price in a given time period, in our case, on a monthly basis. So, in housing markets where the percentage of listings with price drops decreased year-over-year suggests that homebuying activity is being sustained without the resort to slashing prices. On the other hand, in housing markets where this metric increased, it may imply that housing market activity has cooled and dropping prices on active listings is needed to sell homes.

For the San Diego metro area overall, 27.1% of active listings had price drops in June 2023, which is down by 26.3% from June 2022, when the percentage of price drops was 36.8%. The city of San Diego proper experienced a similar trend, having 36.2% of active listings with price drops in June 2022, before declining by 21.8%, to having 28.3% of active listings with price drops in June 2023. Below is a table detailing the year-over-year change in the percentage of active listings with price drops across all the areas we analyzed in the greater San Diego housing market:

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.

Median Days a Home Spends on the Market in San Diego Is Fairly Stable

A further useful metric for analyzing housing market activity is the length of time a home for sale spends on the market before being bought up. Redfin refers to this measure as days on market, which it defines as the monthly median days on market a home for sale sits before being taken off the market. In the San Diego metro area, the median number of days on market of a home for sale remained unchanged year-over-year, at 12 days on market in both June 2022 and June 2023. For the city of San Diego proper, the median days on market — 12 days — also didn’t change from June 2022 to June 2023.

Below is a table detailing the trends in days on market in the 19 areas we analyzed in the greater San Diego housing market:

The Bottom Line on Will the Housing Market Crash in San Diego

Based on the data we analyzed, the San Diego housing market seems pretty unlikely to crash. The greater San Diego area overall has not witnessed a substantial piling up of housing inventory. Home prices have either slowed their growth from year-to-year or declined slightly from peaks reached in 2022, but no serious plummets. A crucial point to understand about American housing markets nowadays is that the immense majority of current homeowners took out their mortgages during the era of low interest rates in the 2010s, when the Federal Reserve cut rates in order to stimulate recovery from the housing crash and global financial crisis. Because of this, a much smaller share of American homeowners is going to encounter the kind of repayment shock that so many homeowners faced in 2007-2008 when the then very popular adjustable-rate mortgages readjusted to the new, higher rates. In fact, the San Diego housing market is proving to be one of the more stable housing markets that we’ve analyzed, in contrast to, say, Las Vegas or the Phoenix housing market.

Read the full article here

Share This Article
Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *