Combine nearly perfect weather, a laid-back feel, great schools and active lifestyle, and what’s not to love about the San Diego area? It is one of the most desirable cities in which to live, and for good reason. So what does that mean for the San Diego housing market? Depends on whom you ask, but the general consensus is that home prices will stay consistently strong; it is a seller’s market, with houses sitting for few days on the market, but low interest rates make it a good time to both buy and sell in San Diego, and Richard Realty is ready to assist you!
The average home price in San Diego is just north of $500,000. The national average is just north of $200,000. Since the recovery from the economic downturn in 2008, prices have steadily increased and have stayed consistently strong. Say you bought a home in San Diego three years ago. That home, if nothing has changed, has appreciated more than $140,000. Looking at the country as a whole, houses during that time frame have appreciated just over $50,000. So the market is consistently strong.
It’s because 5 of the most expensive real estate markets in the country are in California. Also, our unemployment rate (6.1%) is low, which means more people are moving into the area with good-paying jobs and many are investing in real estate once they get here. At the same time, new housing construction has slowed, meaning there is a greater demand on the homes that are currently on the market, keeping prices strong.
The median price of a home in SoCal is expected to rise 4.2 percent this year, rather than the expected 7.2 percent increase in 2017. Still, the median price of a home here is expected to be $561,000, according to Leslie Appleton-Young, who is the chief economist for the California Association of Realtors, and who recently presented a forecast for 2018.
She said lack of new home construction, among other things, will keep home prices rising the next three to five years. But she said there are becoming fewer people who can afford to buy their first home. The growth in annual income has not met the growth in annual increases in home prices. Appleton-Young called it statewide affordability, meaning that you can’t afford a home if your house payment exceeds 30% of your gross monthly income. Back in 2012, the recession was still having an effect on housing prices, where statewide affordability was at 51 percent. Her predictions are that statewide affordability will drop to 26 percent this year.
So another factor is population growth. She expects the population in California to grow from 39.4 million in 2016 to 40 million people this year. They need places to live. So take all of this into consideration, and the sales of homes have stayed pretty steady for the last few years. We’ve had historically low interest rates and good job growth, but fewer homes on the market have kept prices strong.
Her opinions, based on research underscore a recent Time’s Money report, which states the real estate prices in San Diego will remain about the same this year as last, and then see a gentle increase over the next few years.
In 2018, it can be confusing to navigate the world of real estate in the San Diego area. Contact us to help you buy or sell your property!