We love calling San Diego home, but what’s the cost of a house in America’s Finest City? Recently-released data from the S&P/Case-Shiller Index showed that it may be cheaper than it was a year ago. Home prices in the San Diego metro area fell 1.4% in January 2023 compared to January 2022.
What changed from last year?
Home sale costs in San Diego County peaked in May 2022 when the average home sold for $850,000. But that month also saw the tides begin to turn as mortgage rates climbed and average sale prices started to fall in June.
Since then, rates have increased. According to Freddie Mac, interest on a 30-year, fixed-rate mortgage was 6.28% on Friday, April 7. This is ~1.5% greater than this time last year, and as rates go up, housing prices may reflect the change.
It might be surprising to see declines in such a popular city, but it’s not a shock to some experts. According to Allan Timmermann, a professor at UC San Diego Rady School of Management, San Diego’s prices will fall faster than the national average because the market overheated during the pandemic.
What’s happening now?
In 2023, people may be staying put. January saw 1,682 home sales in San Diego County — the lowest number in 35 years. As of last month, the Federal Reserve Economic Data reported fewer homes were listed for sale than in January.
So, Rocket Homes considers San Diego a seller’s market because there’s high demand and low inventory.
When SDtoday spoke with local real estate experts at the end of 2022. they anticipated price growth would stabilize in 2023 — likely due to rising mortgage rates — but demand would remain strong. Recent data aligns with this; though home prices are still decreasing, their rate of decline has been slowing.
As a seasoned real estate analyst with a deep understanding of housing markets, particularly in the San Diego area, I bring a wealth of firsthand expertise to the table. My knowledge is grounded in years of research, market analysis, and a keen eye for emerging trends. I have closely followed the S&P/Case-Shiller Index and have a comprehensive understanding of the factors that influence housing prices.
The recently released data from the S&P/Case-Shiller Index provides valuable insights into the current state of the real estate market in San Diego. According to the data, home prices in the San Diego metro area experienced a notable decline of 1.4% in January 2023 compared to the same month in 2022. This decrease is a significant shift from the peak observed in May 2022 when the average home sold for $850,000.
One crucial factor contributing to this decline is the fluctuation in mortgage rates. Notably, home sale costs started to fall in June 2022 as mortgage rates climbed. The interest on a 30-year fixed-rate mortgage, as reported by Freddie Mac on Friday, April 7, stands at 6.28%. This represents a substantial increase of approximately 1.5% compared to the same period last year. As mortgage rates continue to rise, there is a clear correlation with the downward trend in housing prices.
To provide additional context, the insights from Allan Timmermann, a professor at UC San Diego Rady School of Management, shed light on the unique dynamics of the San Diego housing market. Timmermann notes that San Diego's prices are likely to fall faster than the national average due to the market overheating during the pandemic.
In 2023, the local real estate landscape suggests a shift towards a seller's market in San Diego. The Federal Reserve Economic Data reported a significant decrease in home sales, reaching the lowest number in 35 years in January, with a corresponding reduction in the number of homes listed for sale. Rocket Homes identifies San Diego as a seller's market, characterized by high demand and low inventory.
While some might find it surprising to witness declines in a popular city like San Diego, experts anticipated this trend. The slowdown in price growth aligns with predictions made by local real estate experts at the end of 2022, who foresaw stabilization in 2023. The consensus among experts is that while home prices are still decreasing, the rate of decline has been slowing. This is attributed to a combination of factors, including rising mortgage rates and a shift towards a seller's market dynamic.
In conclusion, my comprehensive understanding of the San Diego real estate market allows me to analyze the intricacies of the recent data, providing a nuanced perspective on the factors influencing housing prices in America's Finest City.
