Record High Median Prices and Supply-Demand Dynamics in San Diego

The San Diego real estate market continues to witness remarkable growth, with median prices reaching all-time highs for single-family homes. Despite higher mortgage rates, low inventory, and high demand have offset downward price pressure. In this blog, we will delve into the factors driving the market, explore the inventory trends, and analyze the supply-demand dynamics shaping the San Diego real estate landscape.

Record High Median Prices:

In February 2024, the median price for single-family homes in San Diego County soared to $1,010,000, marking a new record high. This unprecedented price surge in the winter months suggests a strong likelihood of continued price growth throughout the first half of the year. Condo prices, while 1.8% below the August 2023 peak, are also expected to reach new highs in the coming months. The scarcity of inventory further fuels price increases as buyers strive to find their ideal properties.

Impact of Mortgage Rates and Buyer Demand:

High mortgage rates have influenced both supply and demand in the market. However, with rates above 6% for 15 months and the anticipation of rate cuts in the near future, potential buyers have had more time to save for down payments and will have opportunities to refinance in the next 12-24 months. While high demand remains a driving force, the limited supply poses challenges for the market to meet the growing buyer demand.

Inventory Trends and Market Outlook:

Inventory for single-family homes and condos in San Diego has been declining, nearing all-time lows. The typical seasonal pattern of increasing inventory in January or February, peaking in July or August, has been disrupted in recent years. While there was hope for increased inventory after a significant rise in new listings in January 2024, new listings declined in February. The next few months will be crucial in determining the trajectory of the market. More supply is necessary for a healthier market, as demand remains strong. Year over year, inventory is down 8%, but sales and new listings have seen increases of 6% and 4%, respectively.

Supply-Demand Dynamics and Market Indicators:

Months of Supply Inventory (MSI) serves as a key indicator of the supply-demand relationship. Currently, MSI suggests a sellers' market for both single-family homes and condos in San Diego, with demand outweighing supply. Additionally, the percentage of list price received by sellers is expected to be higher throughout 2024 compared to 2023, indicating a favorable market for sellers.

The San Diego real estate market continues to experience robust growth, with record-high median prices for single-family homes. Despite challenges posed by high mortgage rates and limited inventory, buyer demand remains strong. The anticipation of rate cuts and opportunities for refinancing present advantages for potential buyers. Monitoring inventory trends and understanding supply-demand dynamics will be crucial in navigating this dynamic market. Consult with real estate professionals for personalized guidance to make informed decisions in the evolving San Diego real estate landscape.