San Diego Home Prices Predicted to Drop

San Diego Home Prices Predicted to Drop

March 1st, 2023

According to a recent study from the University of California San Diego, San Diego’s booming real estate market may be facing a downward trend in home prices by the end of this year.

The study predicts that San Diego housing prices will drop by 12% by the end of 2023, higher than the national average of 5%.

Although this may be welcome news for those waiting for the right time to enter the market, it also raises concerns about the current state of the economy.

Tracking Internet Search Data

The researchers behind the study track keywords on Google related to buying a house, allowing them to predict housing prices.

Alan Timmerman, a UC San Diego professor of Finance and Economics, explains that there is a close relationship between search activity on the Internet and house prices 3-12 months down the line.

The indication that search activity is much lower now than in early 2022 suggests that demand is cooling off, which has historically been associated with price declines.

San Diego’s Overheated Market

Timmerman explains that San Diego’s housing prices are dropping more than the national average because it’s where the market overheated the most during the pandemic.

He predicts that Phoenix and Las Vegas will also see a decline in housing prices.

However, housing prices in Kansas City, MO, and other areas in the Midwest are predicted to rise by 2%, where prices never went as high as they did in San Diego.

Affordability Issues

The study also reveals that 17% more homes in San Diego were valued at $1,000,000 in 2021 compared to 2015, with 28.8% of homes in San Diego valued at over $1,000,000.

However, only 16.6% of people in San Diego could theoretically afford them, indicating a significant affordability issue.

Even those with livable incomes find it challenging to buy or rent a home due to the high cost, which is a disproportionately high part of their salaries.

Extreme Caution Advised

While the predictions in this study may be good news for those looking to enter the market, it’s crucial to view them with extreme caution, particularly regarding economic forecasts. It remains to be seen whether Timmermann’s predictions will turn out to be true.

As Ariana Cohen from CBS 8 explains, predictions should always be viewed cautiously, and economic projections are no different.

Tips for Buying or Selling a Home in San Diego’s Volatile Market

San Diego’s housing market has been one of the most volatile in the United States. It is essential for homebuyers and sellers to understand the current state of the market and how to navigate it successfully.

Here are some tips for buying or selling a home in San Diego’s volatile market:

Work with an experienced real estate agent

An experienced real estate agent can help you navigate San Diego’s housing market and provide valuable insights into market trends and conditions. They can help you find properties that meet your needs and budget and can help you negotiate a fair price.

Be prepared to act quickly

In San Diego’s competitive market, homes can sell within days of being listed. Ensure you have your financing in order and be prepared to make an offer quickly if you find a property you like.

Get pre-approved for a mortgage

Getting pre-approved for a mortgage will give you a clear idea of how much you can afford to spend on a home. This will help you narrow your search and make buying more efficient.

Consider a home inspection contingency

A home inspection contingency can protect you from unexpected repairs and issues arising during buying. It allows you to renegotiate the terms of the sale or back out of the deal if there are any significant issues.

Price your home competitively

If you sell a home in San Diego, it is important to price it competitively. Working with an experienced real estate agent can help you determine a fair price based on current market conditions.

Make your home stand out

To sell your home quickly in San Diego’s competitive market, you must make it stand out. This could mean staging your home, making minor repairs, or upgrading certain features to make it more attractive to potential buyers.

Be prepared for multiple offers

In a competitive market like San Diego’s, it is common for homes to receive multiple offers. Be prepared to negotiate and consider all offers carefully before making a decision.

The new UC San Diego study predicting a 12% drop in San Diego home prices by the end of 2023 offers hope for those looking to enter the market. Nevertheless, the affordability issue remains a significant concern for many, as the high cost of housing takes up a substantial portion of their salaries.

While these predictions should be viewed cautiously, the study offers insights into the current state of San Diego’s real estate market and how it may evolve.

Only time will tell whether the predictions come true, but those interested in buying or selling homes in San Diego should keep a close eye on the market trends.

If you are considering buying or selling a home and live in the San Diego area, please get in touch with us and see how we can help!