San Diego Housing Market: Latest Trends and Insights

The San Diego County housing market continues to navigate a complex landscape, with high prices, limited inventory, and a persistent seller's market.  Let's delve into the latest market data for September 2024 and analyze the key factors shaping the current real estate environment.

Price Trends: Record Highs and Potential Contraction

Single-family home prices in San Diego County reached a record high in June 2024, hitting $1.05 million.  Despite elevated mortgage rates, high demand and persistently low inventory have continued to push prices higher.  While prices typically peak in the summer months, some minor price contraction is expected in the fourth quarter, similar to the modest price decline in the third quarter.  However, with limited inventory, prices are likely to remain supported as supply declines in the second half of the year.

Inventory and Sales Activity: A Tight Market

Total inventory in San Diego County fell 79% from July 2019 to January 2022 before building again as mortgage rates rose, pricing potential buyers out of the market. Low inventory and new listings, coupled with high mortgage rates, have led to a substantial drop in sales and a generally slower housing market. Typically, inventory begins to increase in January or February, peaking in July or August before declining once again from the summer months to the winter. In 2023, inventory patterns didn’t resemble the typical seasonal inventory peaks and valleys. 

It’s looking like 2024 inventory, sales, and new listings will resemble historically seasonal patterns, but at a depressed level. Even though inventory has nearly doubled from January 2024 to September 2024, it’s still 29% below pre-pandemic levels. Inventory still increased, though, which is atypical in September. Falling mortgage rates have brought buyers and sellers back to the market during the time of year the market tends to slow significantly.

Months of Supply Inventory: A Seller's Market

The Months of Supply Inventory (MSI) metric, which measures the time it would take for all current listings to sell at the current sales rate, provides a valuable indicator of the supply-demand balance.  In September 2024, the MSI fell slightly to 2.6 months, still indicating a seller's market.  This trend has persisted since February 2023, with an average MSI of 2.5 months for the year.  While the MSI may drift slightly upward in the winter months, it's expected to remain below three months for the remainder of 2024.

The San Diego housing market continues to be a seller's market, with high prices and limited inventory.  While mortgage rates have softened demand, they haven't significantly impacted price growth.  Buyers seeking to enter the market should be prepared for competition and potentially higher prices.  Sellers, on the other hand, can benefit from strong demand and a favorable market environment.  Stay informed about market trends and consult with a real estate professional to make informed decisions and navigate the San Diego housing market effectively.