San Diego Real Estate Update August 2023

Hey guys! I’m excited to dive into the latest real estate trends and shed some light on the burning question that’s been on everyone’s mind: Is California experiencing a mass exodus, and how is it impacting the housing market in San Diego? Let’s break it down.

Setting the Stage in San Diego

The numbers paint a compelling picture. Inventory has dipped by a significant 26.2%, resulting in fewer homes available for eager buyers. Year over year, we’ve observed a 26% drop in sales activity. Now, you might have come across some gloomy articles suggesting a bleak scenario due to the decrease in home sales but don’t let those headlines fool you – our market remains strong. Despite the lower inventory, the demand for San Diego properties continues to surge. This interplay between supply and demand has been instrumental in driving home prices upwards. In fact, for the seventh consecutive month, our city has outpaced home sales compared to the available inventory. A simple economic principle at work – lower supply and higher demand naturally leads to increasing prices.

California’s Exodus: A Closer Look

Now, let’s address the big concern – the supposed exodus out of California. While other regions within the state may be experiencing a net outflow of residents, San Diego tells a different story. In fact, migration patterns reveal that we’re attracting four times as many people as we’re seeing leave. Our beautiful city has become a sought-after destination, with Bay Area and Los Angeles residents leading the charge in relocating to our sunny shores.

San Diego Shines Amidst Market Fluctuations

When comparing San Diego’s housing market to some of California’s other major cities, such as Sacramento, San Francisco, and Los Angeles, the contrast is striking. While these cities have witnessed year-over-year declines in home values, our San Diego market boasts an impressive 3% increase in value. Even when we expand our scope to neighboring markets like Phoenix, Las Vegas, and Utah, we see prices softening while San Diego’s market remains on the rise. A significant factor contributing to our market’s resilience is our geographical limitations. With much of our city already developed, we’ve embraced the concept of vertical growth and urban infill projects.  The scarcity of available homes, coupled with robust demand, acts as a natural buffer against drastic price declines.

A Glimpse into the Future

So, what’s in store for San Diego’s real estate market moving forward? The key lies in inventory levels. For values to see a significant decrease, we’d need a substantial increase in available homes. However, this scenario is unlikely, given the current landscape. Many homeowners are enjoying historically low-interest rates and might be hesitant to sell and face higher rates elsewhere. Additionally, our development options are somewhat limited, further reinforcing the idea that our prices are here to stay, offering a safe and stable investment.

Buyers and Sellers

For my buyers out there, my advice is simple: seize the opportunity. While interest rates may be higher now, they are expected to decrease in the future, making your investment even more affordable down the line. If you buy now, you can always refinance when interest rates drop back down. 

As for my seller clients, it’s all about presentation. Invest in some renovations and spruce up your property to ensure it stands out in a competitive market. Things like new paint, carpet, staging, and cleaning will make all the difference in the sale of your property. We can help get all this work done and even front the capital for you with our Compass Concierge program.

If you have any questions, please feel free to reach out to me or anyone on the True Local team.

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