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A recent report showed that the San Diego real estate market experienced the most significant annual increase in home prices over the past year. It also experienced significant inventory declines during that same timeframe.
But what does this mean for homebuyers in 2024? What’s the general outlook and forecast for the San Diego real estate market in 2024?
Below, you’ll find an assessment of current housing market conditions across the San Diego metro area, with some long-range predictions for 2024.
Earlier this month, Realtor.com’s real estate research team from Realtor.com published a housing market update with data for the nation’s 50 largest metro areas. These monthly reports help us connect the dots between various market trends to get a broader sense of what’s happening in the real estate market.
According to this latest update, the San Diego-Carlsbad-Chula Vista metro area experienced the most significant increase in real estate list prices over the past year.
Granted, there’s an essential difference between list prices and sale prices. But the two metrics tend to coincide. When list prices increase significantly over a certain period, sale prices and median home values tend to follow suit.
According to the October 2023 Realtor.com report:
“Prices in Los Angeles (+23.8%), San Diego (+18.2%), and Richmond, Va. (+15.0%) saw the biggest increases among large metros, predominantly due to larger and more expensive homes coming on the market in these areas.”
Recent data from Zillow revealed that the median home value for the county has also risen over the past year. As of October 2023, the average price for a home in San Diego is $961,629, a 1.3% increase from last year.
This marks a turning point within the San Diego-area real estate market. That’s because prices declined through the second half of 2022 and into the first part of this year. This makes the current rise in prices all the more noteworthy.
Like most metro areas nationwide, the San Diego housing market has lost inventory over the past year.
We’ve seen a similar reduction in demand from buyers due to a rise in mortgage rates. But there are still more buyers in the market than properties available, which will keep the market competitive well into 2024.
There is only a 2.9-month supply of single-family homes in San Diego and a 2.5-month supply of condos. That characterizes a very tight housing market where inventory is relatively short. A balanced market would be one with a 6-month supply of homes.
That means it would take six months for the current supply of homes on the market to sell at the current sales pace. Generally speaking, a 6-month supply means home prices are increasing at a moderate and healthy pace.
According to the October 2023 report, the total number of active real estate listings in the San Diego metro area declined by -37% over the past year, among the nation’s 50 largest metro areas, that was the third-largest decline in inventory after Las Vegas, Nevada (-55%) and Phoenix, Arizona (-44%).
The real estate market in San Diego also has fewer price reductions these days. This means local sellers are more inclined to stand behind their listing prices instead of reducing them due to a lack of offers. Last month, only 14.5% of listings across the San Diego-Carlsbad metro area had a price reduction. That was a decline of nearly ten percentage points from a year earlier.
Of course, all of these things are connected. Tighter inventory conditions have given sellers more negotiating leverage than a year ago. This, in turn, leads to higher offers from buyers, which boosts home prices across the board.
While this may be tougher for buyers, it’s an excellent situation for sellers taking advantage of a spike in home equity and getting much more money from selling their homes with little effort.
In some respects, San Diego currently has the hottest housing market in California as of fall 2023. A recent report from the San Francisco Chronicle, using data from Zillow, revealed that home prices in San Diego are rising faster than in any other part of the state.
The 92103 ZIP code, in particular, experienced the most significant six-month home price increase of any ZIP code in California. This includes the area just north of downtown San Diego and the Hillcrest area. According to the Chronicle’s report, the median house values in that ZIP code rose by more than 5% over the past six months alone.
According to RedFin, the San Diego real estate market in 2023 is very competitive. Homes are selling much faster than they did last year. RedFin says homes are selling in about 14 days on average, compared to 18 days from last year.
Further, homes in San Diego receive an average of 6 offers, making it a competitive situation for buyers vying for the same house. Sellers can also snag a sale price higher than their listing price.
More specifically, the average home sells for approximately 1% above the listing price and goes pending in about 13 days. Hot homes fetch even higher sale prices, selling at about 4% over the listing price and going pending in about seven days.
“San Diego has been a popular destination for people from within and outside the state to move to recently,” said Jeff Tucker, senior economist at Zillow. “The city’s desirable climate, beaches, vibrant culture, and diverse job opportunities make it an attractive choice for relocation.”
He’s right about the area’s attractions. The San Diego area has a lot going for it regarding quality of life, all of which attract home buyers into the market.
Characteristics like these will help contribute to a healthy San Diego real estate market in 2024.
Mortgage interest rates have seen incredible growth over recent months. According to the latest data from the Mortgage Bankers Association (MBA), the average rate for a 30-year fixed-rate mortgage hit 7.67% as of mid-October 2023. That’s the highest it’s been since the end of 2000.
High mortgage rates have been a thorn in the side of homebuyers and have kept many of them out of the housing market due to affordability issues. Inflated rates have also put a damper on refinancing, as homeowners looking to refinance their mortgages have little reason to do so until rates finally start to dip.
And that might happen going forward, according to MBA analysts. Mortgage rates may finally decrease late in 2023 and into 2024. More specifically, experts anticipate mortgage rates to go down to 5.4% by Q4 2024. That means homebuyers in San Diego and surrounding areas can snag a much lower interest rate for their home loans next year.
Even with an increase in the average home price in San Diego, lower interest rates will make it easier for homebuyers to get approved for a mortgage in 2024.
Given the current supply and demand situation, a realistic forecast for the San Diego real estate market in 2024 would include steady home price growth over the coming months. And researchers from Zillow recently offered that very prediction.
Specifically, they predicted that the median home value for the San Diego-Carlsbad metropolitan area would rise 2.7% between September 2023 and September 2024. That would closely mirror the average rate of home price appreciation going back 40 years or so.
In summary, the San Diego real estate market in 2024 is a relatively healthy one. Home prices are expected to rise moderately, while mortgage interest rates are expected to dip.
Both buyers and sellers will be interested in a San Diego real estate market update for today’s market and the market going forward into 2024. This will have a direct impact on their decision-making in terms of whether or not the new year will be an excellent time to buy or sell.
Whether you’re buying a home or ready to refinance, our professionals can help.
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No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.