Will San Diego home prices continue to go up?
“Will San Diego home prices continue to increase?” is probably the number one question I am getting from my clients and to answer that, let’s take a look at some of the historical data.
This graph here is the most up-to-date information we have in San Diego. It’s provided by InfoSparks and I get it through the San Diego Association of Realtors. and what we’re looking at here is all of San Diego County, all real estate prices, all types of property for the last year and we’re seeing the median home price for the last year has been going up, up, up, up to today, the end of February, we are at a median home price of $670,000 for all of San Diego County.
Why are the home prices going up?
Well, one reason is, is because the mortgage rates have been going down but the other reason is the inventory is going down.
According to this graph, we peaked at May of 2020 with 6,658 homes on the market and since then, it has been going down, down, down and the end of February, we were sitting at 2,842 homes on the market and to put that into contacts there are 3.3 million people living in San Diego County so that is nothing.
So, will San Diego home prices go up? it depends on two things.
1. The mortgage rates. And right now they look like they’re starting to creep up and then,
2. Will the inventory go up? But also to put this into context, I just want to show you a little bit of the history and this takes us back all the way to January of 2004. And we can see here in the housing bubble, this is when we were all afraid and then, you know, the median price went down, down, down.
Here’s the bottom of our market and then from there it’s gone up, came back down again in 2012. And then since then it’s been going up, up, up with the biggest increase here starting in May of 2020 and continuing to go up.
Now, let’s take a look at the historical data for the inventory. This again takes us all the way back to January of 2004 and we can see, that we reached the peak here in 2006, started coming down, inventory.
This is what the bottom of the market was and we had 6,167 homes on the market and we thought that was low. Since then, since December of 2012, it’s gone up, it’s gone down, it’s gone up, it’s gone down and then here September of 2018, we finally thought that maybe we were going to get more inventory on the market and that would cause prices to go down a little bit, but then the government kicked in and gave us some incentives and then boom, it’s gone down and then here since July of 2019, it has just been a downward spiral.
We went into 2020 a little bit low, then the pandemic hit, we started to pick up on inventory and then boom.
So the simple answer is, as long as the mortgage rates are low, as long as there is very low inventory, home prices in San Diego are going to continue to increase.