Recent data and forecasts for the San Diego, California real estate market suggest that it’s weathering the coronavirus pandemic just fine.
Home prices and sales have both risen in recent months, despite the turmoil in other areas of the economy. Low inventory and steady demand are two of the key driving factors affecting San Diego’s housing market outlook for 2021.
Home Prices Continue Climbing
It’s hard to believe that home prices across the San Diego metro area could be rising steadily at a time like this. But that’s exactly what is happening, as of late summer 2020.
Home values across the San Diego-area housing market have risen significantly since the start of this year. Sales are up as well, showing that there is still strong demand among home buyers in the area.
A Positive Forecast for San Diego Housing Market
According to an August 2020 report from the California Association of REALTORS® (C.A.R.), the median sale price for existing single-family homes in San Diego County rose 6% from June to July of 2020.
To put that number in perspective, 6% is slightly higher than the average annual home-price increase across the U.S., going back several decades. And that 6% gain mentioned above happened in one month.
That’s surprising, given the current state of the economy and the ongoing public health crisis.
It also shows that the job losses recorded in San Diego have not affected the real estate market very much. That might be because many (if not most) of those losses occurred within the hospitality and service industries, which are largely comprised of renters instead of homeowners and buyers.
Annually, the median sale price for existing single-family homes in San Diego rose by a whopping 10.6%. That’s from July 2019 to July 2020.
Home sales were an even bigger surprise from June to July of this year. According to the C.A.R. report mentioned above, existing home sales rose by 18% during that one-month period. They were up by double digits annually as well.
Low Inventory Is Driving Quick Sales
When you consider the current supply-and-demand situation, it’s easy to see why San Diego real estate market forecasts are mostly favorable through 2020 and into 2021. The short version of the story is that there aren’t nearly enough homes listed for sale to satisfy the current level of demand from buyers.
This is true across much of Southern California, as we head into the fall of 2020. In fact, the Southern California region was recently singled out as having the steepest decline in housing inventory over the past year or so.
According to the August 2020 C.A.R. report:
“Southern California had the biggest annual drop in inventory in July at 50.7 percent — less than half the level of for-sale properties it had a year ago. All counties in Southern California dropped more than 40 percent…”
As of July 2020, the real estate market in San Diego County had about a 1.9-month inventory of homes for sale. That was well below the national average for the same timeframe. It is also much lower than what’s considered to be a balanced market.
From an inventory standpoint, the San Diego housing scene currently favors sellers over buyers. In fact, recent reports from real estate agents in the area indicate that desirable properties are receiving multiple offers within days of coming onto the market.
Multiple Offers … During a Pandemic?
In July, homes listed for sale in San Diego County spent a median of just 10 days on the market, before going under contract. That was one of the lowest levels of any county in California during that month.
This means homes are selling relatively fast within the San Diego housing market, compared to many other metro areas across the country. And it’s easy to see why, when you look at the supply situation mentioned above.
Local Realtor agent Allan Uy recently told San Diego’s NBC 7:
“Last year, you were seeing that balance where you had that 30 days on the market, which is more typical. Now, you are seeing multiple offers where it’s taking 3 or 4 days [to get an offer].”
Back in April, as the COVID-19 situation was flaring up across the U.S., real estate activity and home sales ground to a near halt. Since then, however, the industry has been deemed “essential” and has adopted a more digital approach.
Today, real estate transactions and mortgage loans can be processed digitally with little or no face-to-face contact. That’s one reason why the San Diego housing market — and the nation’s as a whole — has continued to move forward in spite of COVID-19.
Population Growth Also a Factor
We talked about the supply side of the equation already. The San Diego real estate market is currently experiencing a supply shortage relative to the number of buyers actively seeking properties.
And this comes at a time when the population is growing.
According to the U.S. Census Bureau, the city of San Diego’s population grew by more than 9% from 2010 to 2019. The broader metro area, which includes Carlsbad and Chula Vista, also experienced significant growth over the past few years.
Maybe it’s that year-round pleasant weather that draws people to the area. Or the beaches. Or the many outdoor activities. The point is, steady population growth in San Diego is putting upward pressure on home prices, especially with the shortage of available inventory.
Home Buyers Look to the ‘Burbs’
There’s another trend that could affect San Diego’s housing market forecast through 2020 and into 2021. Urban flight.
Recent data and anecdotal reports suggest that an increasing number of home buyers are shying away from crowded city centers in favor of more suburban markets. It’s easy to understand why, given the current emphasis on social distancing.
Additionally, more people are working from home these days, and many find themselves needing more space, an office area, etc.
This urban-to-suburban shift could increase housing demand and home prices within some of the more “spread out” areas of San Diego. On the flipside, we could see less demand and softer prices within the crowded city centers. Condos, in particular, could see a dip in prices as buyers gravitate toward detached homes and yards.
The bottom line here is that San Diego’s real estate market outlook is relatively favorable, considering what’s happening in the world. The current supply-and-demand situation is skewed in a way that should sustain home prices throughout the public-health crisis.
Disclaimer: This article includes third-party data, reports and predictions for the San Diego real estate market through this year and into 2021. Economic and housing-related forecasts are the equivalent of an educated guess and should be treated as such.
SOURCE: HOME BUYING INSTITUTE