The San Diego housing market saw a steep decline in home sales last month, yet property values remained steady, hovering near the $1 million mark, according to data from the Greater San Diego Association of Realtors (SDAR).
Decline in Home Sales
In September, the county recorded 1,036 single-family detached home sales, a 23% drop compared to August and nearly 30% lower than September of last year. This marks a continuation of the downward trend in home sales, as fewer homes are coming onto the market.
Some of the areas with the highest number of single-family home sales included Rancho Bernardo East, Oceanside North, Fallbrook, Valley Center, Oceanside East, and Ramona.
Similarly, sales of townhomes and condos also saw a sharp decrease, falling by 20% from August to September. Only 620 units were sold, marking a six-month low for these types of properties in the region.
Inventory Shortage and Rising Costs
San Diego’s housing market continues to face a severe inventory shortage. The number of active listings has significantly declined over the past year, contributing to higher costs for both buyers and renters.
Despite the drop in sales, the average home price in the region reached $1 million for the first time in August. While prices dipped slightly in September, with the average single-family home costing $999,000, they remain well above the area’s previous record of $975,000, set in April.
Impact of Mortgage Rates
The rising cost of borrowing is a key factor affecting the housing market. With mortgage rates climbing from 3% to nearly 7%, many homeowners are reluctant to sell their properties, as purchasing a new home would mean taking on higher payments. This hesitation has further tightened the supply of homes on the market.
Homes in San Diego are selling faster and at higher prices due to the limited inventory. According to Redfin, most homes in the region are sold within 12 days of listing, reflecting the intense competition among buyers.
Challenges in Housing Affordability
The shortage of available homes has also impacted the rental market. As buying becomes less affordable, more people turn to renting, which has driven up demand and costs in that sector as well.
SDAR President Frank Powell emphasized the need for more housing development to address affordability issues. “The housing affordability dilemma will persist as long as new home and community construction continues to lag,” he said. Powell noted that until interest rates drop closer to 5.5%, the market will likely remain slow with record-low inventory levels.
The Path Forward
San Diego remains one of the most competitive and expensive real estate markets in the U.S. Experts agree that increasing the availability of affordable housing can help ease the pressure on both the homebuying and rental markets, creating more options for local residents.
For now, high prices and limited choices make navigating San Diego’s housing market a challenge for many buyers and renters alike.
