California Real Estate Blog

The San Diego housing market has been predicted to continue to progress. Home prices are expected to keep increasing mainly because of the tough competition that develops among buyers. This is quite a rationale if you take time to understand the current situation in supply and demand throughout the San Diego housing market 2021.

In other words, there are lots of buyers searching for home properties in the area that they can buy. However, there is no enough supply to cater to the entire demands of the consumers. This situation has greatly affected the prices to hike and the competition to get even tougher. Forecasts say that this can result in progressing home-price appreciation the entire year of 2021 and even up to the following year.

This article will tackle several topics that will help you understand the San Diego housing market. If you are currently planning to buy a home in San Diego, you would want to learn more facts about the market before you fix your decision. Read on to get the specifics of homes in the area.

San Diego Housing Market’s Current Flow

The low-tier home prices in San Diego soared high after the end part of 2012. In 2015, another increase in home prices was experienced because of the boost provided by the reduced mortgage rates. Despite the current rates, buyers are still focused on buying a property in the city.

Even though there was a constant growth in house prices from 2012 to 2018, it was observed that the housing market lied down from March 2018 until the middle of 2019. The growth in home prices in 2018 abruptly depreciated in response to the decreasing sales and increasing interest rates, which started in the last part of 2017.

Since then, home prices went up and there was a positive forecast. The common home value in San Diego is around $829,062. The figure suggests that 50 percent of the entire housing stock has a price of not less than $829,062 while the remaining 50 percent is below $829,062.

Home values in San Diego have gone up to 22.5 percent over the year 2020. During the past 12 months, the appreciation rate in San Diego has been roughly 5.88 percent. In the recent quarter, the appreciation rate was 1.93 percent, which generates an annual rate of 7.95 percent. Generally, there is an insufficient supply of properties in San Diego. Buyers are then obliged to wrestle often which leads to quicker sales and higher home values that will likely benefit sellers.

What are the Predictions in San Diego Housing Market?

It is no longer new to our knowledge that the national tax cut legislation impaired home purchasing in California as well as other areas since it settled caps on the deductions on the mortgage for people who particularize their taxes. Nevertheless, that has not prevented builders to continue their business in and around the area of San Diego, as well as some of the properties that were built – together with those who could be buying them – may amaze you.

There are various predictions for homebuyers in San Diego. Here are some of the things that you may want to know:

• The Following Year is a Good Period to Rate your Home if you Plan to Sell it

Experts say that in 2021, the economy will plunge. This scenario can greatly affect the prices of the San Diego housing market. Nevertheless, no one really thinks that the values will go down just as how they went down in 2008. Many think that the values could just stay flat.

Local real estate experts say that a lot of people will begin searching for a home for sale in the latter part of the year. Thus, winter or fall of 2021 can be a great time to have your home listed in the market if you are planning to sell it. You can take advantage of these seasons so you can market your home at the best rate possible. For sure, a lot of buyers will come to inquire about your property.

• Rentals will Increase

Well, this has been the current trend for the past years. In fact, rents in San Diego make some of the highest rents throughout the nation. Renters allocate 40 percent or more from their income. Now, you realize the impact of the high rental on the quality of life the people are getting.

This scenario can affect the purchase of single-family homes in several ways. The increasing rent can eventually oblige the people to look for other areas with cheaper rents. That could imply less competition for the buyers of home properties in San Diego. Furthermore, it may also curve the opposite path if the rent turns so high that renters begin to realize that it will be more practical to avail either long-term or short-term finances.

Currently, a lot of people are deferring home purchases because they want to check whether the home values have spiked. However, that is a risk since home prices are to hike in 2021. That is predicted to hysterically change during the last quarter as renters decide to purchase homes.

• A Great Portion of Home Buyers will be the Millennial

It is predicted that millennials who are earning high will grasp the chance of buying a home while the home values depreciate or follow a flat line during the late part of 2020 and in 2021.

You can expect a very competitive housing market, specifically with the starter homes. Now, if you intend to join the home market, you should consider preparing your finances rather than keep on waiting. Otherwise, you may see yourself shelling out a higher amount of money to still compete for the property you want to own. Do not forget that more people could also be interested in your choice of home.

• More Green Homes will be Available

California has new building codes which mandate new homes' functionality to produce renewable energy. Other building codes order new single-family homes as well as the low-rise multi-family homes to attach solar panels on their roof.

These orders give favor to home buyers since these modifications will not raise the buying cost excessively, but cut on expenses as they can save on the energy costs. In fact, some utility businesses created generation programs where people can sell their unused energy.

All these regulations imply that there will be cheaper homes with plenty of green traits appearing in the San Diego housing market in 2021. That sets these kinds of homes achievable to many couples, younger singles, and families.

Many developers are now devising and building communities carrying out these newly established green rules.

• More $1,000,000 Neighborhoods will be Developed

Currently, San Diego has eight neighborhoods. The current condition of San Diego has made it a hot market for communities of this type. Record says that $346M communities were constructed since 2014. It is said that a neighborhood is classified as a million-dollar community when at least 11 percent of the houses cost $1,000,000 or more.

The pricey tend of homes in San Diego is believed to keep going. These communities have many amenities, too, and provide the privacy that gratifies home purchasers require.

Generally, San Diego has options for home purchases and rentals in 2021 while out-migration occurs and more construction of master communities is done. Available options in the San Diego housing market include high-end properties and homes on each level that follow the concepts of green energy. Furthermore, affordable and middle-class homes shall be very competitive since more millennials will join the housing market to acquire their first home property.

People who intend to purchase a home in San Diego should begin preparing their logistics as soon as possible so they can immediately move once the property they like becomes available in the market.

How is the Current Competition among Buyers in San Diego Housing Market?

The demand in the San Diego housing market stays firm throughout the metropolitan place. Throughout the entire county, buyers are wrestling for the insufficient home properties that are for sale. Aside from the increasing home values, the limited supply of properties has made it more difficult for buyers. The demand for home properties is specifically dominant at the lower part of the price range. The more economical starter homes in some portions of the San Diego housing market can be hard to find.

Supply and demand within this extremely aggressive housing market have been imbalanced. The next years are bound to exhibit the same trend on supply and demand, thus, still affecting the home prices.

Inventory is notably low, prices are continuously increasing, and curbed demand together with the reduced rates in the mortgage has turned the San Diego housing market overwhelmed with buyers. The real estate industry illustrates that San Diego is a real estate market of sellers. It means that there are approximately more buyers compared to the number of active home properties for sale.

San Diego Housing Market Trends

These are the current housing market trends in San Diego:

• The Median Home price in the San Diego Housing Market Has Exceeded $600,000

The report explains that the current single-family homes sales increased by 16 percent MTM. The condo market noticed an abrupt growth in the median prices as opposed to the figure last year. The median price of the condo is around $550,000 and acquired a 1.4 percent MTM.

However, this point of value is 22.2 percent higher from 2020. The Months Supply of the current single-family homes is extremely stiff, presently grasping at 1.5 months. It can serve as a good index of whether a specific real estate market is inclining sellers or buyers. Basically, a market can be treated balanced when it possesses a home inventory of 4 to 6 months.  A lower figure implies that buyers are controlling the housing market in San Diego and there are essentially fewer sellers.

• The Volume of Inventory, along with High Demand, Easily Puts the Edge on the Seller’s Favor

Even though there is a shortage of local inventory and home prices are rapidly increasing, the activities of buyers remain solid. Nowadays, buyers show that they are comfortable purchasing at what seems to be the peak of the market. For whatever intents, real estate seems like it will be an important commodity once summer arrives.

Prices will keep on increasing as long as the owners benefit from the supply and demand ratio. Building new homes will gradually alleviate the price hike, however, help is quite very distant from the horizon. Until such time that the new inventory is delivered to the market, the housing market of San Diego will stay exceptionally expansive.

What should the Buyers Get ready with the San Diego Housing Market?

Anyone who is planning to purchase a house from the San Diego housing market should really act fast. San Diego housing market is a rapidly-moving market where homes are likely sold quickly – most of the time with many offers contending.

Based on a report, San Diego County homes for sale remains available in the market for only seven days. In fact, it was noted during spring this year that the San Diego housing market is one of the lowest “days on the market”.

Certainly, these things are interrelated. This is essential because of the stiff inventory situation tackled earlier. There are numerous reasons why the demand for housing in San Diego is high. One is that the city has been constantly known as one of the best cities in the US.

Numerous buyers are aiming to buy a home in the market, however, there are not enough homes to check in the area. This results in more expensive offers, which urges the values of homes north through time.

Should you Buy a Home in San Diego Housing Market 2021?

Who doesn’t want to own a home in San Diego? The city itself is already packed with great culture and interesting activities. However, when it comes to acquiring a home in 2021, you may need to carefully assess whether this is the right time to make the purchase.

There are several things to consider when planning to buy a home in the San Diego housing market in 2021. 

• Home Values are Assumed to Keep on Increasing

Purchasing a house in San Diego can make a better decision rather than postponing the purchase until next year. Moreover, the rates on the mortgage were still lingering in the 3 percent range. Some experts predict that these rates can even go higher over the next months. This should also add urgency to the home-buyers in San Diego. The demand for housing in San Diego has been influenced by the strong desire of people to acquire more space as they spend more hours at home.

• There is an Extremely Stiff Supply

The supply is extremely stiff and having to consider the different factors, it is improbable at this moment for the housing market of San Diego to exhibit a declination in home prices. Thus, buyers are advised to act at the soonest time and exhaust the benefits of the low mortgage rates.

For a single-bedroom home, the median price is around $430,000. If you settle a 20 percent down payment, your monthly payment will be around $1,940. For a two-bedroom home, the median price is around $619,000. If you settle a 20 percent down payment, your monthly payment will be around $2,822. However, if you get a four-bedroom home, the median price is around $1,200,000. If you settle a 20 percent down payment, the monthly payment will be $5,414.

Can the Increase in Mortgage Rates Relax the Housing Market?

The housing market of San Diego stays vigilant about the perspective, specifically when it comes to health issues of winter and autumn. Additionally, insufficient inventory stays the most essential barrier to home sales. However, falling affordability is simply turning away the first-time buyers.

The prices of homes in San Diego have never gone down, they were only noticed to go flat. While the inventory continues to decline, it is realistic to say that there is no sign of relief for the home-buyers. Before the unwinding trends during the fall, San Diego homes’ median prices are said to set new highs in the following months.

In 2021, more homeowners opt to sell their houses, leading to a high percentage of properties for sale as “new listings”. Although the rush of sellers can calm down the competitive pressure felt by the buyers, buyers should still engage in enticing offers to triumph on a multiple-bid condition.

Is There a Chance for the San Diego Housing Market to Crash?

The real estate market this year has been particularly dominant, with steady housing demand in basically all San Diego areas. A sustaining economy as well as the millennials approaching their years of buying a house are inciting an expansion in residential housing. This could definitely post excitement to the housing market!

The low rates in the mortgage, along with the growing online job opportunities, have filled up an outpour in housing demand, specifically in lower-mass suburbs. Home-buyers are spurring up the prices of homes in the housing market of San Diego, causing the immediate selling of the properties.

High-strung buyers will even suggest offers without having to get an actual viewing of the house and renounce contingencies to prevail bidding wrestles in the extremely competitive market. The classically low rates of the mortgage have incited the growth in demand, specifically among millennials. Nevertheless, they do not have enough supply of housing.

A lot of buyers are hoping to find a property that could suit their needs and budget. Although buyers are always advised to buy a house now, many buyers prefer to enclose their housing payments per month by benefiting from the low mortgage rates. Nevertheless, during this time where the housing market is considered hot, it is hard for buyers to look for the best deal, particularly with the common asking price increasing by two digits.

The common belief is that now is a great time for selling and that fundamentally implies that the volume of sellers of homes that join the market continues to increase. The market is massively slanted toward sellers, however, we might be noticing the first indications of a return to a balanced housing market.

Currently, the San Diego housing market is quite far from being normal. Inventories are dropping by over 38 percent a year. The supply of homes in the housing market is perpetually low. With the economy getting better, more buyers have decided to participate in the market. And, since there is just a small number of housing inventory, the prices of homes keep on increasing despite the low-interest-rate plot.

With the improved supply, you can expect the home prices to gradually go down. However, you cannot expect a wide price decrease to happen. Buyers are always attracted to the housing market. This is because of the reduction in mortgage rates and the increase in listings.

Last Words

The San Diego housing market 2021 stays in the limelight of the housing sector of California. Home prices from the local are almost thrice the national average, while the pent-up demand has keyed up an energetic activity.

Forthcoming sales are rising even though there are historic assessments at the start of the competition. Although the demand is still very strong, however, it shows that an equal volume of sellers is not yet confident placing their properties in the housing market.

Long-tern investors and prospective homeowners may see the recent disturbance in the housing market of San Diego to be beneficial rather than being an obstacle.

The increasing price of San Diego homes seems not to affect the interest of many people to own a home in the area. Although these properties can be pricey, they can be great investments plus the fact that a city is an ideal place. Living in a home in San Diego is a dream of many people.