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.