The resilience of San Diego’s housing market has always defied popular convention. Due to the COVID-19 crisis, the U.S. economy contracted noticeably during Q2. Unemployment hovered near the 15% mark in April.
However, unemployment plummeted to 7.9% in September and the downward trend appears to be continuing. The improving economic figures have contributed to an upward trend in real estate, particularly in the San Diego area.
The Current State of San Diego’s Housing Market
By all indications, San Diego’s housing market remains strong.
San Diego Compared to Other Metro Areas
S&P CoreLogic Case-Shiller Indices published in the September Union-Tribune shows our yearly average increase in home prices is 5.5%. This compares to 5.3% for Los Angeles and 2.5% for San Francisco. Meanwhile, Portland came in at 5%, Atlanta 4.8%, Denver 4.4%, Las Vegas 3.3%, and the national average saw a home value increase of 4.8%.
San Diego’s Housing Market Statistics
The October SDAR (San Diego Association of Realtors) monthly analysis shows that buyer activity is strong and expected to continue. Between October 2019 and September 2020, pending sales increased by 1.6%.
The greatest increase was in the $2 million+ market: 28.9%. Meanwhile, the overall Median Sales Price is up 7.1% at $616,000. Single-family homes saw the biggest price increase of 7.5% ($693,400).
Almost every home price range saw an increase compared to last year. The lowest increase was 3.1% in the $500,001 – $750,000 price range, and the highest was 20.1% for homes costing $1,250,001 – $2,000,000.
Factors Contributing to the Upward Trend in San Diego’s Housing Market
Some factors are universal in nature while others are specific to San Diego. The primary reason for the upward trend in San Diego’s housing market is “supply and demand.” Inventory is low, and demand is high.
So, sellers can ask for and get higher prices. The average months’ supply of inventory is only three weeks in the $500K to $750K range and five months in the $2 to $5 million range. Meanwhile, the average months’ supply of inventory is approximately 19 months in the $5 million+ range, a shorter duration than in 2019.
Meanwhile, mortgage rates are at an all-time low. Bankrate.com showed that on October 6, 2020, the benchmark 30-year fixed rate was 3.05% (APR 3.36%), and the 15-year fixed rate was 2.56% (APR 2.87%.)
In addition, the 30-year fixed jumbo rate was 3.11% and the 15-year jumbo was 2.58%. The Fed has said it will continue to support low mortgage rates, and buyers are taking note.
San Diego’s Economic Opportunities
- Employment rates remain positive despite the recent downturn, average income levels are increasing, and our per capita GDP is also rising.
- Compared to San Francisco and other California metro areas, San Diego home prices are low. San Francisco’s median home price is $1.4 million for example. Homeowners who can work remotely are selling their expensive homes and moving to San Diego. There, they often end up buying a larger home to serve their evolving needs.
San Diego Commercial Developments
When commercial real estate shifts and advances, it spurs the residential market. We are seeing both in San Diego.
- Google and other Bay Area tech companies are looking at how they can facilitate better telecommuting. Meanwhile, other big tech companies are increasing their presence in San Diego. Amazon recently announced It will add 40,000 square feet to University City as it expands its operations in our area.
- IQHQ is developing its San Diego Research and Development District (RaDD) in the Bay area, aimed at attracting major pharmaceutical businesses. Tracy Murphy, president of IQHQ, said the goal was to create “a dynamic, waterfront urban lifestyle city” which will establish a unique live-work-play culture.
- The Horton Plaza conversion project is also planning on maximizing downtown office space development.
- Costa Verde Center is being developed into an urban job center that will connect directly to the trolley terminus. There are approximately 18,000 residential units within a mile of this development, making it accessible and attractive to commuters, employees, students, and shoppers.
These major developments will encourage many San Diego residents to stay and others to move here. In addition, San Diego has approved the building of a suburban community, complete with 1,800 homes, a 23-acre public park, and a central shopping area on the 413-acre Mira Mesa site near Sorrento Valley. The development, called 3 Roots, is set to ease the housing shortage in the region.
Take Advantage of San Diego’s Booming Housing Market
Rising demand from buyers moving in from other areas and large commercial developments continue to add to San Diego’s attractiveness. Another example of the city’s strength is its focus on public spaces. In 2019, Children’s Park was awarded an $8 million grant by the City Council to provide more family-friendly amenities.
Add in San Diego’s cosmopolitan lifestyle, reasonable property taxes, low utility costs, and the rise of remote working, and you have a winning formula for a rising real estate market. The social and financial inducements to move to the San Diego region are considerable.