SAN DIEGO HOUSING UPDATE FEBRUARY 2022
San Diego homes are getting bought up quickly this year, with the number of days on the market falling by 46.7%, from 15 days in February 2021 to 8 days in February 2022. San Diego’s months of supply of homes is also dwindling, falling from 1.9 months in February 2020 to 1.1 months in February 2021, and then even further, to 0.7 months in February 2022. New listings in San Diego also declined over the last year by 9.7%.
CITY OF SAN DIEGO HOUSING REPORT BRIEF FEBRUARY 2022
EXISTING SINGLE-FAMILY HOME SALES 482
% CHANGE FROM LAST YEAR -7.5%
MEDIAN PRICE
$1,400,000
% CHANGE FROM LAST YEAR 24.3%
ACTIVE LISTINGS 289
% CHANGE FROM LAST YEAR -36.3%
MEDIAN DAYS ON MARKET = 7
SALES TO LIST PRICE = 103.1%
3 BEDROOM HOMES MEDIAN PRICE: $989,000
# OF HOMES FOR SALE 147
4 BEDROOM HOMES MEDIAN PRICE: $2,200,000
# OF HOMES FOR SALE 184
According to Freddie Mac, 30 year mortgage interest rates have surged to the highest rate in 3 years, 4.6% in March. This was an increase of 1.4 percent since January.
With inflation at the highest it has been in 40 years; interest rates are expected to keep climbing this year. We recognize this will have an effect on affordability putting a downward pressure on real estate prices in the coming months as mortgage rates rise.
However, with real estate being historically one of the top asset classes available to hedge against inflation, the San Diego real estate market is experiencing an influx of capital from foreign, out of state and local buyers looking to safeguard their capital against inflation by investing in a market that is still relatively cheap compared to other markets in California like San Francisco, Los Angeles and Orange County where real estate prices are significantly higher than those in San Diego.
Additionally, the high volatility recently experienced in the U.S and global stock markets paired with the higher degree of uncertainty associated with stock investing makes the real estate market a more attractive
market to invest in inflationary and uncertain times. Therefore, investors are taking some capital out of the stock market and that capital is flowing into real estate investments.
Furthermore, due to the increase in labor and materials cost we anticipate there will be a more limited supply of buildings and development projects in the region helping keep inventory of homes low with demand for homes outpacing supply which can increase property values and rental rates.
As mortgage rates rise affecting affordability and putting downward pressure on real estate prices, we don’t anticipate the real estate market in San Diego will keep rising at the pace that it has been rising in the last few years. But we don’t expect real estate prices to decline in 2022 either due to other forces that also drive the real estate market like a very strong job market, an influx of new highly paid jobs to San Diego (like for example in the biotech and technology sectors), foreign investors buying San Diego single family homes and condominiums at record levels as a safe haven investment to safeguard not just against inflation but also due to the safety and strength that the U.S dollar offers as a currency compared to weaker foreign currencies as well as the stability that the U.S market offers in general from a geo political perspective.
We believe the California real estate market in general still remains one of the most stable and desirable real estate markets available to invest in the United States with the San Diego luxury real estate market representing an incredible opportunity for investors to put their money to work in a market with not just the best climate in the world but also with incredible growth prospects resulting from private / public redevelopment projects, strong job growth and infrastructure spending fueled by the defense, innovation (technology & biotech) and service sectors.
