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Is it a good time to buy a house in San Diego?

Mortgage rates are still low as compared to last year. The 30-Year Fixed-Rate in August 2021 was 2.84% while in Aug 2020, it was 2.94%. The supply is very tight and with all of these factors considered, at this time, it is unlikely that the San Diego housing market will see a price decline in 2021. So, buyers should act now and take advantage of low mortgage rates before they rise to pre-pandemic levels.

  • The median price of a one-bedroom house is $425K. If you put 20% down, monthly payment = $1,935

  • The median price of a two-bedroom house is $588. If you put 20% down, monthly payment = $2,677

  • The median price of a three-bedroom house is $775K. If you put 20% down, monthly payment = $3,528

  • The median price of a four-bedroom house is $1.20M. If you put 20% down, monthly payment = $5,462

Greater San Diego Housing Market Trends

In the Greater San Diego region, the decline in existing home sales coincides with rising sales prices, which continued to soar last month, with the median sales price of existing homes up 14.7% compared to last year, according to the Greater San Diego Association of REALTORS®.

The percentage change is shown year-over-year for October 2021.

  • The Median Sales Price was up 14.7 percent to $860,000 for Detached homes and 18.6 percent to $565,000 for Attached homes.

  • The Average Sales Price was up 13.9 percent to $1,171,220 for Detached homes and 20 percent to $677,959 for Attached homes.

  • Closed Sales decreased 12.3 percent for Detached homes and 12.9 percent for Attached homes.

  • Pending Sales decreased 13.3 percent for Detached homes and 17.5 percent for Attached homes.

  • Inventory decreased 33.8 percent for Detached homes and 55.6 percent for Attached homes.

  • Days on Market decreased 18.5 percent for Detached homes and 12.0 percent for Attached homes.

  • Months Supply of Inventory decreased 35.7 percent for Detached homes and 61.1 percent for Attached homes.

San Diego Housing Market Forecast 2022

What are the San Diego real estate market predictions for 2021 & 2022? Let us look at the price trends recorded by Zillow (a real estate database company) over the past few years. Since Nov 2011, the typical home value in San Diego County has appreciated by nearly 130% — ZILLOW HOME VALUE INDEX. ZHVI represents the whole housing stock and not just the homes that list or sell in a given month.

The price of low-tier housing in San Diego County skyrocketed after the latter half of 2012. 2015 experienced another price increase, due to the boost given by decreased mortgage rates throughout 2015 and 2016. San Diego’s high home prices continued to find fuel from increased buyer purchasing power. Although there has been a steady housing price growth from 2012 to 2018 the housing market did cool off from March 2018 till mid-2019. In 2018, home price growth sharply declined in reaction to slowing sales and rising interest rates, which began in late-2017.

The chart clearly shows the flattening of the home price curve in that period. Home prices have since turned back up and the forecast is also positive. The typical value of homes in San Diego County is currently $814,289. It indicates that 50 percent of all housing stock in the area is worth more than $814,289 and 50 percent is worth less (adjusting for seasonal fluctuations).

San Diego's home values have gone up 25.1% over the past year.'s data also shows that in the past ten years, San Diego real estate appreciated by 95.65%. This amounts to an annual real estate appreciation of 6.94%, which puts San Diego in the top 10% nationally for real estate appreciation.

During the latest twelve months, San Diego's appreciation rate has been around 9.31%. In the latest quarter, the appreciation rate has been 4.01%, which annualizes to a rate of 17.04%. Overall, there exists a limited supply of homes in San Diego, and buyers are forced to compete often resulting in higher prices and/or quicker sales that tend to benefit sellers.

San Diego County also comprises the San Diego-Chula Vista-Carlsbad, CA Metropolitan Statistical Area, which is the 17th most populous metropolitan statistical area. The San Diego-Carlsbad, CA Metropolitan Statistical Area is conterminous with San Diego County in Southern California. According to Zillow, the typical value of homes in San Diego-Carlsbad Metro is $814,289. The forecast for 2021 is that the shortage of supply and an increase in the demand for housing from millennials will push the prices higher in the next twelve months.

As of now San Diego home prices have reached the highest level in years and upward pressure is expected to continue into the next year even if there is a marginal increase in homes for sale. The inventory can dwindle in 1.5 months if no homes are listed. Low mortgage rates will bolster the home buying market and continue pushing up home price growth.

  • San Diego-Carlsbad Metro home values have gone up 25.1% over the past year and Zillow predicts they will rise 20.2% in the next twelve months.

  • San Diego County home values have gone up 25.1% over the past year and will continue to rise at a similar pace in the next twelve months.

  • San Diego City home values have gone up 24.6% over the past year and will continue to rise at a similar pace in the next twelve months.

Both 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 2022. The constraint on available inventory and a decline in new listings is keeping the San Diego housing market skewed to sellers.

The decrease in the number of active listings also indicates that inventory will be very tight over the coming months. It's an opportune time for sellers to list their properties on the market as the sales to list price ratio is almost 101.2%. However, when you consider the current supply-and-demand situation, it’s easy to see why San Diego's real estate market forecasts are mostly positive for the year 2022.

There aren’t nearly enough homes listed for sale to satisfy the current level of demand from buyers. Despite the COVID19 pandemic, San Diego and the entire metro area market is so hot that it hasn't shifted to a buyer’s real estate market. In a balanced real estate market, it would take about five to six months for the supply to dwindle to zero.

In terms of months of supply, San Diego can become a buyer’s real estate market if the supply increases to more than five months of inventory. And that’s not going to happen. This housing market is skewed to sellers due to a persistent imbalance in supply and demand.

This is also true across much of Southern California. The Southern California region was recently singled out as having the steepest decline in housing inventory over the past year or so. It’s a positive sign for homebuyers, especially for those to want to invest in San Diego real estate. For buyers in San Diego, the mortgage rates are still low and the positive forecast for the next twelve months nearly guarantees appreciation.

The US housing market has been heating up with an increase in home-buying activity despite the COVID-19 pandemic. The real estate sector has been one of the most resilient areas of the economy during the severe economic shutdown. While uncertainty remains on the resurgence of COVID-19, the healthy housing demand we see today will create significant tailwinds in the near term.

The chart below, created by Zillow, shows the growth of median home values since 2011 and their forecast until Oct 2022.

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