Is the San Diego Real Estate Market Slowing Down? Who’s Buying Right Now
If you’ve been tracking the San Diego real estate market lately, you’ve probably felt a distinct shift in the air. On this month’s market update, we are tackling the two biggest questions on every local buyer and seller's mind: Are home sales starting to slow down, and who is actually buying in this market?
Let’s dive straight into the local data, the macroeconomic factors driving mortgage rates, and what these changing San Diego housing market trends mean for you.
3 Key Indicators That San Diego Housing Market Trends Are Shifting
To understand exactly where local property values are headed, we have to look at the boots-on-the-ground inventory and sales numbers from the last 30 days. For the first time in four months, we are seeing a clear transition in supply and demand across San Diego County.
Here is how the numbers broke down over the last month:
New Listings: 1,808 new homes came on the market.
Closed Sales: 1,590 homes successfully closed escrow.
Pending Sales: 1,458 homes went under contract.
When you analyze this data, three clear indicators prove that the local market is taking a breather:
Inventory is Outpacing Demand: This is the first month this year where we’ve seen more new housing inventory hit the market than actual homes selling.
Pending Sales Are Down: On a month-over-month basis, fewer buyers are locking in contracts, creating less immediate competition.
Less Foot Traffic at Open Houses: Our day-to-day experience shows a noticeable drop-off in buyer activity on a majority of listings. While activity remains highly dependent on the specific neighborhood, the overall pace has definitely throttled back.
Whether this cooldown is driven by global economic uncertainty or sticky mortgage rates, the reality is a mix of both.
The Mortgage Rates Reality Check
What is going on with mortgage rates right now? We recently watched average interest rates hit their highest point of the year, climbing above 6.65% for a 30-year fixed loan.
This adjustment was primarily driven by a sell-off in the bond market, tied directly to ongoing inflation concerns and fluctuating energy costs overseas.
What Will the Federal Reserve Do Next?
Looking ahead to the upcoming June Federal Reserve meeting, the consensus is that the Fed will leave interest rates exactly where they are, with Wall Street pricing in roughly a 70% chance of a pause. Because inflation numbers haven't spiked drastically enough to warrant a rate hike, an increase is highly unlikely.
The True Local Take: We would love to see the Fed cut rates by even a quarter percent ($0.25\%$). A small drop would signal massive confidence to consumers, stabilize the bond market, and potentially push San Diego mortgage rates back down into the lower 6% or even high 5% range we enjoyed earlier this year.
Who is Actually Buying San Diego Real Estate Right Now?
With rates hovering in the mid-6% range, the affordability equation has changed. First-time homebuyers hoping to utilize a 3% to 10% down payment are facing incredibly high monthly housing costs. Because larger loan amounts are so expensive right now, traditional buyers are pulling back.
So, who is filling the gap? Affluent buyers and high-net-worth investors. We are seeing this trend play out clearly in our local data:
The $5M+ Luxury Boom: The single largest percentage increase in pending sales belongs to luxury homes priced at $5 million and above.
Demand for Larger Footprints: The biggest inventory movement is happening in the 2,000 to 3,000 square foot range—which represents premium, larger family homes here in San Diego.
Coastal Real Estate is Moving: Coastal properties, major renovations, and high-end turnkey estates are still seeing consistent transaction volume.
When the economy feels uncertain, luxury buyers know that premium West Coast real estate remains one of the safest places to hedge against inflation. Furthermore, a 6.5% interest rate is significantly easier to navigate when you are putting down a substantial amount of cash.
Actionable Strategy: Buying and Selling a Home in San Diego This Month
Whether you want to cash out on your equity or capitalize on less competition to secure a property, you need a precise strategy to win in today's micro-markets.
For Sellers: Your Property Must Be a "Showstopper"
Because there are fewer active buyers shopping the market, you cannot afford to waste a single showing. If you are selling a home in San Diego right on the coast with walkability and ocean views, you will always command premium attention. But if your home is located a bit further inland, presentation is absolutely everything.
Make it completely move-in ready: Today’s buyers are actively skipping properties that require immediate out-of-pocket work.
Nail the first impression: Maximize your curb appeal, freshen up the landscaping, and ensure the initial presentation is flawless. Every opportunity to get a buyer through the door matters right now.
For Buyers: Target the Properties That Are Sitting
Don't write off listings that have been sitting on the MLS for a few weeks. Because transaction volume has slowed, perfectly good homes are lingering on the market longer than usual—giving you room to negotiate.
Embrace the renovation opportunity: The vast majority of active buyers are passing on unrenovated homes. Take a moment to evaluate what it would realistically cost to remodel.
Leverage contractor availability: While material costs remain elevated, construction labor is highly available right now. This gives you the leverage to shop around, negotiate with local contractors, and customize a home to your exact taste at a fair price.
Navigate the Shifting San Diego Market with Experts
The macroeconomic landscape is shifting, but real estate opportunities are everywhere if you know where to look. Whether you want to know how these trends impact your current San Diego home values or you're trying to navigate buying a home in today's rate environment, our team has the data to guide you.
Contact Joseph Arendsen or anyone on the True Local Realty Group team today to map out your next move!