The San Diego County real estate market is continuing its long recovery from the 2008 recession and financial crisis; this is in spite of the signals of the next economic recession begun to show up across the market. Increased real estate mortgage interest rates caused ripples across the housing market in 2018, causing home sales volume to fall back.
There are various factors in the market that have been helping real estate values in San Diego County:
- The residential construction has yet to gain any momentum in San Diego, falling back considerably in 2018. Thus far, multi-family construction has experienced a quicker recovery than single family residential (SFR) construction. Expect the demand shift from SFRs to rentals to continue, injecting growth into multi-family construction in upcoming years, peaking around 2022-2023.
- The mortgage rates are historically low and in the second quarter of 2019 they have been lowered again to below 4% per annum for fixed rates.
- The inventory of homes for sale is still low for the county with the size and population of San Diego County.
- And of course, the amount of available cash in the market is a very important player in the stability and growth of the real estate values in the county.
Having said these, the monthly number of sales from the high of about 6,500 in 2006 is now down to about 2,500 per month, mostly due to the appreciation in the median home prices. From the peak of volume of sales of 60,800 in 2003, the number of sales in 2018 was about 39,600.
The forecast for home sales volume in 2019-2020 is mostly based on higher interest rates and economic uncertainty will continue to hold back sales volume further in 2019, with volume continuing to decrease well into 2020 when the next recession is forecasted to arrive. After volume and prices bottom in 2020-2021, homebuyers will return in greater numbers to push the housing market to its next boom, expected in 2022-2023.