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As we head into the new year, the housing market across the country has started to cool, thanks in large part to the Fed’s continual interest rate increases. Still, though, anyone who’s ever lived in California knows that real estate here is different. And that includes San Diego, one of the most golden areas of the Golden State.
Bolstered by coastal access, great weather and high desirability, the San Diego housing market isn’t likely to crash. A gradual downturn in San Diego real estate is a more likely scenario. If you’re looking to buy or sell in America’s Finest City, here’s a quick overview of what to expect.
San Diego real estate market trends
At the start of 2022, San Diego house prices were on the incline. The National Association of Realtors (NAR) reported that home prices had appreciated by 18.5 percent in the last year and a staggering 46 percent in the last three years. In the first quarter of 2022, the median home price was $905,000, nearly triple nationwide median home prices. (No surprise there — San Diego is a notoriously expensive place to live compared with other locales.)
Turns out springtime was the peak. Often the faster prices climb, the faster they fall, and California was one of the hottest real estate markets. Though not as hard hit as other Golden State cities, San Diego saw a 5.2 percent drop in home prices from their apex in April through September, according to a survey by the American Enterprise Institute’s Housing Center.
While San Diego could still be argued to be a seller’s market, buyers can gain some ground as listings linger longer. In November 2022, Redfin reported that houses here spent 28 days on the market (compare that against 13 days in November 2021).
San Diego house prices are also on the decline. The median sold home price is currently around $830,000 per data from Realtor.com and Redfin. That’s a fair margin below the Realtor.com-reported median list price of nearly $900,000, further indicating the San Diego real estate market’s turn toward a buyer’s market, or at least a more balanced one.
San Diego housing market predictions
Real estate pros have been arguing that the residential price increases we’ve seen in the last few years aren’t sustainable. That’s particularly true in already-expensive markets like San Diego that have experienced major appreciation in home values.
You can reasonably expect a correction, meaning that prices will climb back down. A declining population, fueled in part by a mediocre job market, will drive down competition in the market, further supporting price decreases. That said, you don’t necessarily need to brace yourself for a steep decline.
Is the San Diego housing market going to crash?
While the San Diego housing market will almost certainly cool in the coming year, a crash doesn’t seem likely. California mortgage rates are relatively high right now but they should come down. That might help more buyers enter the market, which could tighten inventory. Tighter inventory should stabilize prices, preventing a crash.
Plus, with ocean access and great weather year-round, San Diego will always be a desirable place to live. That means people will always want to move and stay here, minimizing the risk of a rapidly decaying San Diego real estate market.
Should I buy or sell a house now in San Diego?
If you want to sell, now is probably an ideal time to get your house listed. Start by figuring out how much it’s worth now.
Prices should only decline from here, lessening what you could pocket from your sale. Just remember that you’ll need a place to live when you sell. Talk to a real estate agent about the sweet spot between maximizing your profit on your sale and being able to afford your next home, especially if you plan to stay in the San Diego area.
If you want to buy, it may be prudent to wait. Even if the Fed continues to hike interest rates, experts predict that mortgage rates will flatten out. With those decreases, your dollar will go further, meaning you can afford more house. Plus, home prices should decline, too.
That said, if you need to buy now (say you’re relocating for a new job), you’re not in horrible shape. San Diego house prices have already started to soften. And this is a huge city with a diverse housing market so you should be able to find something that works for you.
Finding a trusted real estate agent in San Diego
Whether you want to buy or sell in the San Diego real estate market, timing is everything. And no one knows the local market better — and when to pull the trigger — than a seasoned, local real estate agent.
Before you start working with someone, vet them. With a trustworthy, knowledgeable real estate pro by your side, you should have no trouble navigating the San Diego housing market in 2023.
Almost definitely. In fact, we’ve already seen San Diego house prices start to decline. There’s already a 7 percent gap between median list price and median sales price.
It’s not a horrible time, but with both home prices and mortgage rates coming down, you may save money by waiting until later in 2023.
Ideally, you would have sold earlier in 2022 when prices were at their highest. They’ve been cooling off here, as they have everywhere. You can still make a sale and make money, but it’ll probably take longer and you may not net as much. Acting now to get your house listed can help you hand over your keys before prices drop further.
Not necessarily — some people sell their own homes or buy without an agent by their side. But skipping the pro could cost you during negotiations. In a shifting market, having someone who knows the lay of the land goes a long way.