A recent forecast for the San Diego real estate market suggests that home prices will continue rising into 2019, but at a slower pace than the previous year.
Forecast for San Diego Real Estate Market
The real estate research team at Zillow recently predicted that the median home value for San Diego, California would rise by around 4.3% over the next 12 months. This forecast was issued in November 2018, so it stretches into the fall of 2019.
As of November, the median home value in San Diego was $629,100. That was an increase of 6.2% over the previous 12 months.
So this particular forecast suggests that house values in San Diego will rise a bit more slowly next year than they did in 2018. This mirrors broader projections for the nation as a whole. The general consensus among housing analysts and economists appears to be that annual home-price appreciation will cool a bit over the coming months.
Rising Prices Create Affordability Issues for Many
Affordability has become an issue for many would-be home buyers in the San Diego area. This is another trend that is affecting many major cities across the country, but particularly in the western coastal markets.
During the 20-year period from 1998 to 2018, the median home value in San Diego rose by around 217%. But the median household income only rose by around 77% during that same 20-year timeframe.
This is true for many cities across California. Home prices have risen at a faster pace than income over the past couple of decades, and that has created affordability issues for a lot of residents.
The bottom line is that it has become harder for a person with median income to purchase a median-priced home in the San Diego area. These affordability issues could affect the local housing market in 2019, by softening demand.
In fact, the California Association of REALTORS® pointed to this trend in its forecast for the state’s housing market, published in October:
“A combination of high home prices and eroding affordability is expected to cut into housing demand and contribute to a weaker housing market in 2019, and 2018 home sales will register lower for the first time in four years.”
Sales have declined as well. Last month, the property analytics company CoreLogic reported that home sales across San Diego County dropped by 17.5% in September, compared to a year earlier. That was the lowest level of sales activity for a September in 11 years, and it could be a side effect of the affordability issues mentioned earlier.
Clearly, there is a shift occurring here. This is partly what’s driving the more modest forecasts for the San Diego housing market in 2019.
Positive Sign: Housing Inventory Rose in 2018
One bit of good news for home buyers planning to enter the market in 2019 is that housing inventory has risen over the past year. As of September 2018, the San Diego housing market had about a three-month supply of homes for sale. That was up from a low of about 1.5 months at the end of 2017.
This means there are more homes listed for sale today than last year. This is a trend we are seeing in a lot of housing markets across the western U.S. right now. And it’s good news for home buyers, because it means they will have more properties to choose from (and possibly less competition) compared to those who purchased in the past.
Inventory growth could also have a moderating effect on annual home-price appreciation, by tilting the scales of supply and demand toward a more balanced position.
Disclaimer: This article contains predictions and forecasts relating to the housing market in San Diego, California. Those forward-looking statements were provided by third parties not associated with our company. The publishers of this website make no claims or assertions about future housing conditions.