San Diego Real Estate Market Forecast for 2023

The nation's real estate market has slowed this year, especially after the pandemic boom that created record-low interest rates and massive sales throughout 2020 and 2021. With rates and home prices increasing across the nation while inventory remains low, these trends will likely continue into 2023. The San Diego housing market is no exception to this slowdown and has cooled off from the intense seller’s market seen in 2020 and 2021.

 

San Diego is one of the state's most expensive and competitive markets, and the housing industry is a massive part of its economy, so the downturn has caused worry for many people. That’s not to say that everything is bleak because while there are downsides to this anticipated recession, there is good news. Rising interest rates, low inventory, uncertainty in the national economy, and increasing prices tend to pull buyers from the market, but there has been a gradual increase in the number of available homes, which gives buyers more choices. And, though mortgage rates have increased, they are still relatively low compared to the early 2000s.

 

Because competition for homes has cooled off since the pandemic, it’s an excellent time for buyers to take advantage of the relatively slower market. Inventory is slowly rising but remains rather steady. Subsequently, now is the time for sellers to ensure their homes are prepared because when inventory remains low and buyers remain high, there will likely still be bidding wars and negotiations to go around.

 

Will the market remain steady throughout 2023? Will we see a significant improvement, or will it stay on the decline? Let’s find out.

According to the Greater San Diego Association of Realtors, as of September 2022, the median sales price of single-family homes in San Diego County was $915,000, which is a 7.2% increase over September 2021. While this is lower than the median sales price of March through July of this year, it still represents a rise over the prices seen in 2020 and 2021. Within the city of San Diego, as of August 2022, the current median price of single-family homes was $1.12 million, which is a 13.3% rise over the year prior.

 

This price increase is excellent news for San Diego and should continue to rise despite the rising interest rates, as San Diego is a desirable area for real estate seekers. However, while this may seem like happy news for sellers, the time on the market for the county is sitting at approximately 32 days, which is a 52% increase from the previous year and also represents a gradual increase since January 2022. This indicates a slowing in buyer activity, perhaps due to hesitancy in the overall market. This is mirrored by the fact that closed sales were down 36.1% compared to September 2021, and pending sales were also down 37.3%.

 

Additionally, the amount of home inventory has risen by 29.3% since 2021. This again indicates a slowing of the market, although overall, the available supply of inventory remains low at just 1.8 months.

 

Overall, increased home prices and mortgage rates, combined with the increasing cost of building properties, have reduced buyer activity in the market.

 

Let’s talk about inventory for a minute. Despite the previous decline in inventory that led to many bidding wars across the area, it is currently on the rise, even though the low number of available homes remains in the seller’s favor overall. There may be some standstill at the end of 2022, as the winter months tend to be slow in the real estate market, but predictions have it climbing even more in the coming months. The increasing inventory will make it slightly easier for buyers to gain the upper hand.

With the increase in the number of available San Diego homes on the market and the decrease in sales volume, the San Diego market appears to be shifting toward a more buyer-friendly direction. As more homes are spending more time on the market, sellers may be more willing to negotiate. This may be an excellent opportunity for buyers to jump in on the market if they feel comfortable with the rising mortgage rates.

 

However, this does not mean that the competition for properties is over, which is good news for sellers. While the number of available homes has risen, it still remains low overall at less than two months of inventory. The limited supply of homes will continue to cause buyers to compete for homes, which is excellent news for sellers who want a quicker sale and higher prices. Additionally, the continued inventory shortage and desirability of the area means that home prices will only be driven higher in the next year or two.

 

Despite hard times and the recent downturn, the San Diego housing market remains competitive and is expected to remain a seller’s market rather than fully balancing out. With increasing prices and a relatively slow increase in inventory, that doesn’t seem likely, even into the coming year.

One thing to note is that San Diego remains an exceptional place to live, with plenty of stellar educational opportunities, beaches, and beautiful weather. It is ranked among the top places to live in California and remains a lovely place for everyone that arrives. If you want to make San Diego your home, finding a great home in a desirable neighborhood where you want to raise your family doesn't have to be challenging. Despite the housing market trends, if you’re ready and prepared to enter the real estate market as it is, you’ll be able to find everything you desire.

 

If you’re ready to look at homes or condos for sale in San Diego, CA, or if you’re interested in putting your luxury home on the market, contact expert Realtor Celeste Dunn for the guidance you can count on. Celeste is well-versed in the evolving local real estate market and has a unique understanding of the architecture throughout the area, including historic homes. Reach out to her today to get started on your goals!

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